Texas billionaire David Bonderman takes home $1.5bn profit from Myer deal

http://www.news.com.au/business/texas-billionaire-david-bonderman-takes-home-15bn-profit-from-myer-deal/story-e6frfm1i-1225801674921


Texas billionaire David Bonderman takes home $1.5bn profit from Myer deal
By Jennifer Sexton From: The Sunday Telegraph November 22, 2009 12:01AM




David Bonderman pocketed $1.5 billion by buying Myer at a bargain-basement price and flogging it back to the market at a premium / File

HE'S the genius behind one of Australia's most extraordinary business coups: a Texas billionaire who lives as large as he stands.

Just two years after failing to get his hands on Qantas, the lanky maverick has pocketed a remarkable $1.5 billion profit by buying Myer, one of our best-loved retailers, at a bargain-basement price and flogging it back to the market at a premium.

David Bonderman, renowned as the "King of Buyouts'', has left the Australian Taxation Office scratching its head - and mum-and-dad investors shaking their heads, wondering where their cash went, The Sunday Telegraph reports.

The taxman wants $678 million in tax and penalties, and everyday investors want answers.






Within hours of the Jennifer Hawkins-hyped sell-off of Myer, the bounty controlled by Bonderman's TPG had disappeared.

Overnight, $1.5 billion was spirited out of Australian bank accounts to the Netherlands before being transferred to companies based in two notorious tax havens: the tiny European nation of Luxembourg and the the Caribbean's Cayman Islands.

And the 67-year-old mate of James Packer, who shares the Australian billionaire's penchant for buying into casinos, has pulled off the deal just 12 months after predicting a long, deep and painful recession.

While Bonderman and his equally colourful co-chairman, Dick Blum, quadrupled their investment in Myer, investors watched the stock plunge nine per cent when it listed. They're still waiting for the share price to hit the $4.10 they paid for their stock.

The deal has shades of TPG's buyout of British department store chain Debenhams. TPG and its partners made an almost fourfold return, while the value of Debenhams stock has since fallen by half.

Two weeks after the sell-off saga began to unfold, Australian authorities and the wider business community are still wondering what actually happened.

After the ATO raised the red flag, one Myer investor posted on the financial blog Hotcopper: "Yep ... the money's gone ... all da way to da CAYMAN ISLANDS!!!!! They came to Australia, made the quick big bucks and go without mercy and no social responsibility.''

One Australian entrepreneur told The Sunday Telegraph: "There is something preposterous that when you make a gain here you are paying tax at 50 or 30 per cent, but when a foreigner makes a gain, they pay no tax.

"They were never intending to sit on (the Myer investment) for 100 years.

"They improve, stroke and hit the business, prod it, and then they flog it."

And that's exactly what Bonderman and his high-flying buddy Blum did with Myer. Like the Myer deal, everything the enigmatic big man from Texas does is big - his partying and his personal fortune among them.

The father of five is said to have thrown the most lavish multi-million dollar bash in history to celebrate his 60th birthday, even bringing in the biggest band in the world - the Rolling Stones - and comic Robin Williams to entertain his guests.

But it's his business acumen that has made him famous. The $US1.7 billion man is a pioneer among the buyout barbarians: he spends millions on troubled assets, turns them around and sells them off for millions more.

That was the modus operandi with Myer. With Dick Blum, Bonderman's Texas-based TPG came to Australia with $500 million to buy the troubled retail giant.

Three years later Blum, who travelled to Myer board meetings in his $70 million Gulfstream jet, and Bonderman are back in America counting their cash and contemplating the next deal.

But with the ATO chasing the money trail, the pair may think again before opting for another bold Australian bid.

The ATO has claimed $452 million in alleged unpaid tax, plus $226 million in penalties. Foreign investors don't pay capital gains tax, and exactly why the tax is being claimed remains a mystery.

The ATO isn't commenting, but there is speculation it will argue that the proceeds should be considered income and taxed accordingly. Sorting that out is likely to take years in the courts.

Bonderman, whose wiry, receding hair makes him look like a mad scientist, is not the type to roll over and pay tax that TPG claims it doesn't owe.

He and Blum don't like talking to the media and, through their gun corporate crisis manager in Australia, Sue Cato, declined to be interviewed for this story.

Cato released a three-sentence statement saying, in part: "Ultimately, the issues will be dealt with according to the law and TPG will co-operate fully with any inquiry the ATO may make, as it has done in the past.''

TPG's Australian office, in Collins St, Melbourne, is run by Ben Gray, son of former Tasmanian premier Robin Gray.

Ben Gray was also involved with TPG's failed $11 billion bid for Qantas - TPG's previous big time tilt at an Australian icon. He, too, wasn't commenting.

Bonderman has been looking to Australia for years, and has formed a friendship with James Packer. Both have invested in the world's biggest casino operator, Harrah's Entertainment, in the US.

Observers have described him as possessing all the charm and arrogance of a Hollywood leading man.

But with the taxman on his tail over the Myer deal it is unclear whether the Harvard-educated former bankruptcy lawyer's 67th birthday this Friday will match the extravagance of his previous parties, which included The Rolling Stones, John Mellancamp and Robin Williams as entertainment.

Even so, on the face of it, Bonderman's Myer moment has capped off an otherwise disappointing couple of years for Bonderman.

He has fallen significantly down the Forbes rich list after blowing as much as $US1.3 billion in an unsuccessful attempt to save the Washington Mutual bank.

He peaked in 2007 as the 105th richest man in the US, with an estimated $US3.3bn fortune.

One of his biggest successes was salvaging Continental Airlines with a $US66 million investment that in five years was worth $US700 million.

He also enjoyed huge success with discount airline Ryanair and fast food giant Burger King.

This latest foray in Australia - one of the biggest of its type in the world this year - appears to be yet another Everest-like success for Bonderman and Blum, his pal of 30 years.

The pair hike together in Tibet, Nepal and Bhutan.

"He climbs, I trek,'' says Bonderman.

Whether they remain on cloud nine over the Myer deal remains to be seen.



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