Rinehart changes Liontown’s game | Is Origin worth more? | Bullock’s oil price headache

James: We spoke to the CEO Tony Ottaviano and I don’t think he was joking when he told us there was a sleeping bag in his office and he’d been having some pretty late nights. The shares are now worth much less than they were, but they’ve got the project away, it’s not a bad thing for the country. This is an exciting project ... but they’ve got Gina Rinehart now sitting on their register owning 19.9 per cent and no one is completely sure what her intentions are.

Anthony: When Albemarle was gone Liontown needed to raise about a $1 billion quickly. So it said the first investor it went to on the equity side to show the deal was Gina Rinehart’s Hancock because it’s their biggest shareholder.

But as of the time that bookbuild launched, which was Thursday night, they still weren’t sure whether Hancock was going to invest more money.

The company’s in a really awkward situation ... it’s always been under the wing of Tim Goyder and his mates from Perth ... they had a big stake in the company and were very much in control of its future.

And then Gina Rinehart, who’s got more cash literally than anyone in Australia, comes in and just changes the game.

Is Origin worth more?

James: [The independent expert’s report into Origin] was something that nobody in the Australian market appears to have ever seen before. The independent expert did their valuation based on Origin accounts to June 30 and they said, “Yep the deal’s fair and reasonable, the company’s [shares are] worth somewhere between $8.45 and $9.48”. So that’s a nice big range. But then the independent experts said, “But if we do something called a roll forward valuation to December 18, when this deal is supposed to close, we reckon it might be worth 40 cents more at the low end of that range”.

Everybody is looking at this going a) what is this? We’ve never seen this before, b) how did you come up with this? There’s not a lot of detail around it. And then c) what does this mean for the takeover?

If you’re one of these big shareholders who thinks they’re not getting paid enough, this roll-forward valuation is manna from heaven. It all really comes back to these big shareholders, do they want to force Brookfield back to the table and say, show us the money?

Anthony: If Brookfield can get a deal with AustralianSuper it’s home.

James: To block this deal, you need 25 per cent of shareholders to vote against. So AusSuper with its 14 per cent, they’re the kingmaker.

Anthony: My gut feeling is [AusSuper has] got $2 billion invested in this thing … This is the best way in Australia to play the energy transition in listed markets and Australian Super is not going to give that away cheaply. I reckon they’re pretty serious.

Bullock’s oil price headache

Anthony: We’ve seen [RBA governor] Michele Bullock and [Treasurer] Jim Chalmers raising concerns about oil this week, and the uncertainty that it puts in the economy. This is the commodity that touches all the different pockets in the economy. This is exactly what they don’t need, isn’t it?

Michael Stutchbury: You’ve had before this with a 30 per cent increase in oil prices engineered by Russia and Saudi Arabia cutting back. That’s added a little inflation shock.

The Reserve Bank said through their minutes from their October 3 board meeting, released this week, that they have limited patience for inflation going off the path towards the 2 to 3 per cent target by 2025.

Next week, we’ve got the September quarter CPI that will show, most likely, inflation above the path towards target … They probably won’t increase interest rates at the next board meeting, but they might.

Of course, the government and the Treasurer have been pushing not to increase interest rates because it’s very hard for them politically. But they’re getting in a position where the new governor they’ve just appointed may have to increase interest rates again to deal with this petrol price shock. With petrol prices rising above $2, even $2.30 ... that will add to the real difficulty of getting inflation down while you get a soft landing in the economy.

Listen to the full podcast to hear more from Financial Review editor-in-chief Michael Stutchbury including why he thinks the PwC tax scandal, rise and fall of Qantas, and Israel-Gaza conflict will continue to reverberate over the next year.

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This week in The Fin podcast, Joe Aston on his evolution from gossip columnist to campaigning journalist and life after Rear Window.