It says plenty about the mess at organic formula vendor Bellamy's Australia that almost half the cash raised from its $60.4 million entitlement offer will be used to pay off its partner Fonterra.
It will cost $27.5 million cash to extract Bellamy's from the onerous contract with Fonterra, which looked fabulous when the Chinese market could not get enough of its infant formula, but looked ridiculous when the bottom fell out of the market last year.
In a boom market, it did not matter that the company risked "shortfall payments". These are the cash payments it would be forced to make to Fonterra if demand fell short and it did not meet the sales volume commitments it made to the Kiwi dairy group.
The Faustian bargain with Fonterra was needed due to a fact that no one paid that much attention to at the time - Bellamy's did not actually make its products, or own any of the raw materials used to make it.
Bellamy's is a marketing and branding company that relied on supply and manufacturing contracts for the actual product.
It is part of the wreckage left by former Bellamy's CEO Laura McBain, who did not survive the China crunch. But she still did well out of the gold rush.
The $60.4 million raising is priced at $4.75 a share, a bit less than the $14.55 a share McBain realised from her multimillion-dollar share sale in August last year. It represented a 1450 per cent gain in the two years since the company listed.
The new CEO, Andrew Cohen, has partly fixed the problem of Bellamy's having so little control of the physical production line by spending $28.5 million of cash and shares on Camperdown Powder - meaning it will be operating its own manufacturing facility for the first time.
"The acquisition will help build our brand credibility with trade partners and consumers," said Cohen.
However things turn out, Cohen is unlikely to milk the company in the same way that McBain did during her stint as CEO, but he will be paid more.
McBain received a base salary of $578,533 last year, and remuneration totalling $1.24 million.
Cohen's base pay has been set at $820,000, the company revealed on Tuesday. His total remuneration could reach $2.32 million.
Just the Fax
This time last year, CBD was reporting on the abrupt departure of Fuji Xerox's Australian boss, Neil Whittaker, just 12 months after jumping across from New Zealand where he had won three managing director of the year awards from Fuji Xerox.
Mystery surrounded his departure, but the industry was already rife with stories of the "win at all costs" culture he tried to implement.
This included reports of his first sales meeting. Whittaker apparently told the sales reps to throw their car keys on the table.
Anyone with a non-luxury car was then told to go out and buy one to help project the right image of success.
An image of success was definitely not being projected this week when Fuji Xerox's global chairman and three executives resigned over an accounting scandal that was first uncovered in New Zealand, and has now extended to Australia.
An investigation concluded sales were overstated in Australia and New Zealand by 37.5 billion yen ($450 million) in the five years ending 2016.
Most of the company's other senior executives are being demoted, and face humiliating pay cuts over the scandal.
"We will strengthen corporate governance at Fuji Xerox," said FujiFilm Holdings's president Kenji Sukeno. FujiFilm is the main shareholder in Fuji Xerox.
No names are mentioned but the report states: "It became clear that management that (sic) overemphasised sales by former FXNZ MD (Fuji Xerox New Zealand managing director) led to the inappropriate accounting," it said. "The MD of FXAU (Fuji Xerox Australia) since April 2015, was dismissed former (sic) FXNZ MD in May 2016."
The report says that in March this year the Fuji Xerox parent company received a letter from its auditors stating "it obtained information that indicates there might be irregularities in the accounting at FXNZ".
An investigation was started the next day.
In April, Fuji Xerox revealed that revenues in its New Zealand business may have been overstated to the tune of 22 billion yen.
There has been no public response from Whittaker whose LinkedIn profile says: "Having recently returned to New Zealand, now seeking a new challenge which offers the potential to transform businesses into successful enterprises."
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