Australia's HESTA puts MinRes's governance problems on a watchlist; Moody's lowers outlook
HESTA, an Australian superannuation funds said that it had placed Mineral Resources in its watch list on Friday. It cited disappointment at the company's lack of response to issues surrounding billionaire founder Chris Ellison.
As of 0055 GMT, shares of the company had fallen as much as 2,5% to A$40.610. Since the MinRes internal investigation concluded on Monday, over 7% of market value has been wiped off by this news.
The diversified miner announced earlier this week that its founder and managing director Chris Ellison would leave the company in 18 months following an internal investigation which found him guilty for evading tax and using company resources to his personal advantage.
HESTA stated in a press release that "our concerns include the fact that the timeframe for the succession of the managing director does not reflect how serious the issues are and that issues identified show a systemic failing of governance at senior management and the board level."
Moody's Ratings also revised the outlook of the miner to "negative" as opposed to "stable", to reflect potential implications arising from the corporate governance problems at the company. The global rating agency confirmed MinRes' corporate bond and senior unsecured bonds ratings of "Ba3".
Moody's stated that the transition of the managing director from his role in the next 12-18 months creates uncertainty about the future, the strategic direction and the financial policy settings for the company.
HESTA confirmed earlier this week that the portfolio exposure of HESTA to MinRes was 0.83% as of October 24.
HESTA has said that it subjected watchlisted companies, to increased monitoring, direct engagement and an escalation structure, which may include voting against directors or supporting shareholder resolutions, and possibly divesting.
HESTA takes these measures when it finds that there has been insufficient progress made in mitigating risk and believes such action is in the best interests of its members.
Woodside and Santos are also on the HESTA Watchlist, it says.
(source: Reuters)
