Major steelmaker, BlueScope Steel, has revealed a new CEO to replace the retiring boss, Kirby Adams, who has guided the company since it was set free from BHP back in 2002.
The company's Chief Financial Officer, Paul O'Malley, will succeed Mr Adams as Managing Director and CEO effective from November 1 this year. Mr Adams revealed his plans to depart around a year ago.
The company was one of the two major businesses in BHP Steel (the other is now known as OneSteel) and its main activities are centred around the Port Kembla works in NSW and the Western port rolling mills and other facilities near Melbourne. It has a significant presence in parts of the US and Asia.
The announcement came in the wake of a sharp slide in the BSL share price, from just under $12.40 almost three weeks ago, to around $10.40 yesterday.
The softening in the share price followed an easing of the market chat that BSL may be being stalked by a big foreign steelmaker. Arcelor Mittal, the world's largest steel group was the most popular name in the market, but interest from a big Russian group was also mentioned.
BlueScope last week completed the acquisition of Smorgon Steel distribution business for $1 billion as part of a deal which saw the rest of Smorgon taken over by OneSteel.
Adams raised the speculation a notch last week when he said in an interview that he expects further consolidation in Australia's steel sector. He said BlueScope had received a number of informal approaches from international companies.
But nothing has transpired and no formal statement to the market has been made about the approaches, raising the question if investors have been kept fully informed.
BSL said that as part of the transition to his new role, Mr O'Malley will join the board of BlueScope Steel.
Mr O'Malley joined BlueScope Steel as CFO in December 2005 and in that role was responsible for leading the company's finance and IT functions, including mergers and acquisitions, treasury, tax, audit, and investor relations.
That would have made him one of the drivers of the company's year-long campaign to participate in the break-up of Smorgon Steel.
That happened last week, after 13 months of dealing and negotiations. OneSteel had kicked off the rationalisation with a merger offer to Smorgon in late June, 2006.
That was knocked back by the competition regulator and the deal had to be recast a couple of times to meet objections from the ACCC.
Mr O'Malley was formerly the CEO of America's biggest power utility, TXU Energy, a subsidiary of TXU Corp based in Dallas, Texas. TXU Energy is a $9 billion turnover energy company, serving more than 2 million customers in Texas.
BSL said in a statement yesterday that Mr O'Malley has held other senior management roles within TXU including Senior Vice President and Principal Financial Officer of TXU Energy, and CFO of TXU Australia.
"Prior to those roles he worked in investment banking and consulting. Born in Dubbo, NSW, Mr O'Malley (43) holds a Bachelor of Commerce and Master of Applied Finance."
Mr O'Malley will be paid up to $3 million a year ($1.6 million base pay and 80% of that as a short term bonus and up to 14% of the base pay in retirement benefits). He will also be entitled to $2.5 million worth of shares over a three to five year period. That $2.5 million value is in 2007 dollars: if he does his job and grows the share price, the value of his holding will rise.
Mr Adams, the retiring BSL CEO, will depart with around $26 million or more in company's shares from purchases and options deals. He had been a senior employee of BHP Steel when it was owned by the Big Australian and picked up shares in the float.
The fact that Mr Kirby announced a year ago that he was departing, he has allowed the BSL board to look long and hard for a replacement. The fact that they found one inside the company says a lot about good planning and the right culture.
