IN­QUIRER

In­side the bat­tle to di­vide the Packer for­tune

The Weekend Australian - - FRONT PAGE - DA­MON KITNEY

James Packer was do­ing his best to blend into the bustling crowd at Syd­ney in­ter­na­tional air­port when he saun­tered into the arrivals con­course six days be­fore Christ­mas 2014.

Dressed in jeans and sport­ing a pair of de­signer sun­glasses, he waited pa­tiently for his Los An­ge­les-based ex-wife Erica and their chil­dren to emerge from the cus­toms hall af­ter their long Qan­tas flight from Amer­ica.

They were home for a Christ­mas ren­dezvous with their father and un­sur­pris­ingly, af­ter a tip-off, the lo­cal pa­parazzi were there wait­ing to meet them. Af­ter greet­ing his fam­ily with kisses and hugs, as the pho­tog­ra­phers swirled around them in the air­port carpark, James un­char­ac­ter­is­ti­cally called out: “Go for it … It’s fine.”

But his happiness was short­lived, with other fam­ily mat­ters about to be­come much more prob­lem­atic. His older sis­ter, Gre­tel, had re­mained very much in the shad­ows in the nine years since their father’s death. For decades it had been com­mon knowl­edge that the Packer women played sec­ond fid­dle to the men of the em­pire. That was about to change. Gre­tel had watched on from afar as her then Los An­ge­les-based brother made a big splash in Hol­ly­wood with his RatPac film pro­duc­tion busi­ness and pur­sued a strange life in Is­rael. His Is­rael and Hol­ly­wood ad­ven­tures saw him be­com­ing less in­volved in the com­pany that held most of the fam­ily for­tune, Crown Re­sorts.

In May 2014, Gre­tel ap­proached Syd­ney fund man­ager Will Vi­cars, the chief in­vest­ment of­fi­cer at bou­tique in­vest­ment firm Cale­do­nia In­vest­ments, to ask him if he would be pre­pared to bro­ker an agree­ment with her brother to di­vide their father’s multi-bil­lion-dollar es­tate.

Vi­cars ac­cepted the chal­lenge, hav­ing known Gre­tel since she was five. He had also at­tended the same school as James, the ex­clu­sive Cran­brook in Syd­ney, leav­ing two years be­fore him. De­spite their age dif­fer­ence, they had be­come friends at school.

In 2013 James had made head­lines when he fol­lowed Cale­do­nia’s lead to make a sur­prise $330 mil­lion in­vest­ment in US prop­erty start-up Zil­low. James also viewed his Zil­low pur­chase as an act of faith in his friend Vi­cars.

“It was an awk­ward process, be­cause I had been rep­re­sent­ing James on Zil­low and his sis­ter had asked me to help her in ne­go­ti­a­tions with her brother. I had known Gre­tel for decades and she trusted me,” Vi­cars now says in his first pub­lic com­ments on the bat­tle be­tween the sib­lings. At his side in Gre­tel’s camp for the ne­go­ti­a­tions was fi­nancier Michael Triguboff.

James now says about Gre­tel’s move: “I think my sis­ter thought RatPac was a folly. I think my sis­ter was prob­a­bly con­fused about my time in Is­rael. Mostly, I think my sis­ter thought she could do bet­ter than me in busi­ness. And she is do­ing a very good job of it.”

On Christ­mas Eve 2014, a pack­age of doc­u­ments ar­rived in the hands of James’s lieu­tenants, Con­sol­i­dated Press Hold­ings direc­tors Guy Jal­land, Ashok Ja­cob and Mike John­ston. They carried a se­ries of writ­ten de­mands by Baker McKen­zie le­gal part­ner Steven Glanz, on be­half of Gre­tel. She wanted to break up the com­plex net­work of trusts that held to­gether the Packer fam­ily for­tune, al­leg­ing that Jal­land, Ja­cob and John­ston had not been be­hav­ing in the trustees’ best in­ter­ests. And she wanted to di­vide the fam­ily for­tune. Her brother was livid.

James says the tim­ing of Gre­tel’s de­mands could not have been worse. He’d sold all the fam­ily’s me­dia busi­nesses — bar a stake in the strug­gling Ten tele­vi­sion net­work — and rein­vested the pro­ceeds in the Crown casino busi­ness, whose share price had fallen by one-third dur­ing 2014.

But Gre­tel was in no mood to be fobbed off. She had re­solved to tackle her brother head-on, even brief­ing a Lon­don QC to con­test her father’s will at Lon­don’s Privy Coun­cil.

The ini­tial ne­go­ti­a­tions to di­vide the fam­ily for­tune started in early 2015 and took six months. They weren’t pleas­ant, as James be­came ag­gres­sive towards Gre­tel and her ad­vis­ers, be­liev­ing that his sis­ter was seek­ing to take ad­van­tage of him at his weak­est mo­ment. At times, rude emails were ex­changed.

In early 2015 his pri­vate com­pany CPH bor­rowed $630m in long-dated money on the US pri­vate place­ment bond mar­ket, an al­ter­na­tive to bor­row­ing from tra­di­tional banks and pub­lic bond mar­kets avail­able to Amer­i­can and for­eign com­pa­nies.

Unlike bank debt, this sort of money is ex­pen­sive and can’t be paid back early. The money would be used to pay Gre­tel out.

When an agree­ment with Gre­tel was fi­nally doc­u­mented, a day af­ter James’s 48th birth­day on Septem­ber 8, it was re­port­edly worth $1.25 bil­lion and in­cluded a lump sum worth more than $200m. Gre­tel and her chil­dren also would re­ceive a se­ries of smaller se­cured cash pay­ments over the com­ing years and re­tain a mi­nor resid­ual in­ter­est in CPH.

What wasn’t re­ported at the time was that the deal also pro­vided Gre­tel with per­sonal guar­an­tees over all of the fam­ily’s as­sets — which she had de­manded and which al­lowed her to sell any as­set the fam­ily held if her brother de­faulted on an obli­ga­tion — send­ing a debt-laden James fur­ther into panic.

When James and Gre­tel agreed to pose for a pho­to­graph for The Daily Telegraph news­pa­per at Syd­ney’s Rock­pool res­tau­rant on the evening of Oc­to­ber 19, 2015 — two days af­ter news of the set­tle­ment of their father’s es­tate broke — the at­mos­phere was tense.

While the shots pub­lished the next morn­ing showed them smil­ing at each other, in­side they were do­ing any­thing but. What the pub­lic did not know at the time was that ne­go­ti­a­tions be­tween the par­ties had recom­menced four weeks ear­lier, af­ter James de­cided he wanted to pay his sis­ter early rather than stag­ger­ing the pay­ments over fu­ture years.

He was es­pe­cially in­censed by terms of the deal oblig­ing him to pro­vide Gre­tel with hun­dreds of mil­lions of dollars in pay­ments — plus in­ter­est — at set dates up to 10 years into the fu­ture.

By the mid­dle of Oc­to­ber he was deeply frus­trated, claim­ing Gre­tel was drag­ging out the ne­go­ti­a­tions to put him un­der more pres­sure. He told Gre­tel and her ad­vis­ers at the time that he was be­ing “tor­tured”. But Gre­tel was an­gry that de­tails of the con­fi­den­tial agree­ment they had struck in the mid­dle of the year and for­malised in Septem­ber had found their way into the me­dia.

She was also wary of James’s blos­som­ing re­la­tion­ship with pop star Mariah Carey.

By Christ­mas Day, eight months ahead of Gre­tel’s 50th birth­day, a re­vised $1.25bn deal was agreed, run­ning over a shorter time­frame. Im­por­tantly for James, it re­duced CPH’s debt to $1.5bn from the $2.3bn it had risen to un­der the orig­i­nal deal. It had been $1.5bn when his father died in 2005. Gre­tel re­port­edly emerged with stakes in Crown and Zil­low as well as cash hold­ings, a resid­ual in­ter­est in CPH and own­er­ship of the Packer fam­ily’s long- time sea­side re­treat at Palm Beach north of Syd­ney. But, tellingly, the re­cut deal also gave Gre­tel a one-quar­ter share of the fam­ily’s famed polo es­tate in the NSW Hunter Val­ley, Eller­ston.

It is over Eller­ston that James and his sis­ter re­ally fell out.

As James’s world spi­ralled out of con­trol in 2016, his obli­ga­tions to his sis­ter con­tin­ued to con­sume him. By the end of the year, he wanted to bring all his fu­ture obli­ga­tions for­ward and cut the cord be­tween them once and for all.

They met in Aspen on Fe­bru­ary 17 and 18, 2017, to talk about a res­o­lu­tion for the fi­nal tranche of the set­tle­ment, but the talks did not go well.

Two im­por­tant top­ics were on the ta­ble — the fu­ture own­er­ship of the Arc­tic P su­pery­acht and Gre­tel in­creas­ing her in­ter­est in Eller­ston. The former James agreed to sell to Gre­tel, who jumped at the op­por­tu­nity to keep the boat in the fam­ily.

But the lat­ter is­sue re­mained a sore stick­ing point.

When James made his first visit to Aus­tralia in two years for the Crown an­nual gen­eral meet­ing in Mel­bourne in Oc­to­ber 2017, he and Gre­tel lunched at the ex­clu­sive Koko Ja­panese res­tau­rant, but re­mained at odds over the fi­nal tranche of their set­tle­ment.

Eller­ston was again the stick­ing point. Gre­tel wanted more of it, but James was re­sist­ing. He could not bring him­self to give up con­trol of it.

Even­tu­ally he re­lented, agree­ing at the end of 2017 that Gre­tel could even­tu­ally move to take full own­er­ship of his and Crown’s 50 per cent stake in Eller­ston to give her 100 per cent con­trol of the prop­erty. The fi­nal set­tle­ment also in­cluded other liq­uid as­sets and prop­erty.

“Eller­ston is a painful sub­ject for me. Gre­tel has ex­clu­sive rights to it now and in the fu­ture will own it 100 per cent. It is where my father is buried. Will (Vi­cars) and Gre­tel won it from me,” James now says.

But, he says, al­low­ing Eller­ston to be in the deal with his sis­ter was the price he had to pay for re­duc­ing his debt and al­low­ing him to keep his half-share of Crown.

“My father once said to me, ‘Son, the prob­lem with the English is they sell their busi­nesses to keep their prop­er­ties. Sell your prop­er­ties to keep the busi­ness,’ ” he quips.

James now says he has deep re­grets about his fight with Gre­tel but wants to make clear that his ac­tions were bet­ter than his words.

“Even though we have a frame­work ar­range­ment that spans many years, I sep­a­rately ar­ranged, with­out obli­ga­tion, to make funds avail­able to Gre­tel and her chil­dren early. To do that put me un­der fi­nan­cial pres­sure,” he says.

“I ac­cept at times my words were un­for­giv­able to Gre­tel and Will. I hope my ac­tions were bet­ter than my words.

“I can un­der­stand my sis­ter want­ing to be bought out. I can un­der­stand my sis­ter say­ing, ‘James, Will Vi­cars is go­ing to be a bet­ter cus­to­dian of my money than you.’ I just wish we had all done it bet­ter, and I cer­tainly take my share of the blame for that.”

In March this year, re­mark­ably the two sib­lings agreed to put the past be­hind them and make peace. Ros Packer is said to have played a key role in the rec­on­cil­i­a­tion when she vis­ited her son in Aspen in the first part of 2018.

“My sis­ter and I have made up. I want to thank David Gon­ski, Matthew Grounds and my mother for help­ing both Gre­tel and I make peace. I’m so happy. I love my sis­ter,” James de­clares.

Gre­tel Packer’s first pub­lic com­ments on the bat­tle also ap­pear gen­uinely heart­felt.

“I love my brother very much and am very happy that he and I have been able to ne­go­ti­ate this set­tle­ment,” she says.

“I don’t think there was ever go­ing to be an ‘easy’ time for us to do this and it was al­ways, more likely than not, go­ing to be dif­fi­cult. The short-term eas­ier op­tion would have been to leave it for our six chil­dren to work out … and that would have been un­fair to them and lazy of us.

“The fact that we didn’t take that route is some­thing I think we should both be proud of.”

Af­ter a nasty fall­ing-out with Vi­cars dur­ing the ne­go­ti­a­tions, James says he has also agreed to make peace with a man he now de­scribes as a “for­mi­da­ble ne­go­tia­tor”. “Will Vi­cars is a bet­ter stew­ard of my sis­ter’s money than I am,” he says.

“(Vi­cars’) ac­tions and words (in the Gre­tel ne­go­ti­a­tions) were bet­ter than mine. He out-ne­go­ti­ated me ev­ery time. He fought for Gre­tel on ev­ery point right till the end. Gre­tel couldn’t have had a bet­ter ad­viser and friend tak­ing care of her in­ter­ests and hold­ing her hand.

“Even when I tried to be gen­er­ous, Will still fought for a bet­ter deal for Gre­tel, which in­fu­ri­ated me at the time.”

James says Vi­cars is “a self­made man, whereas I in­her­ited all my money. Will and I have made up. It makes me very, very happy. I’m glad we’ve put all the bad blood be­hind us.”

Vi­cars agrees it was a long, drawn-out, emo­tional process ne­go­ti­at­ing the divi­sion of a whole range of as­sets that were dear to the hearts of both sib­lings.

“A lot of things were said that both sides wish were never said, but that’s what can hap­pen in the heat of the mo­ment. That mo­ment went on for quite a while,” he says.

“At the end of the day, ev­ery­one is now talk­ing again; the emo­tion has washed through. The pain of deal­ing with emo­tional as­sets and large sums of money has passed. Both par­ties are back to be­ing more like brother and sis­ter. James and I are in contact again, and our re­la­tion­ship is back to where we started.”

Whether the peace will now hold re­mains to be seen, given that the wounds of both run deep. Those clos­est to them, led by their mother, are pray­ing it does.

Per­haps the re­gard they share for the man they called Dad — who they both know would surely have wanted them to be close — will con­tinue to draw them back to­gether.

“My father was the largest and most im­por­tant fig­ure in my life. He was the most re­mark­able man, and it’s only with time that I more fully re­alise the breadth and scope of his huge achieve­ments and ac­com­plish­ments,” James says.

“I be­lieve that Gre­tel would share some, if not all, of those sen­ti­ments. Her ac­tions demon­strate that, with her own­er­ship of so many places and things Dad held dear — from her share­hold­ing in Eller­ston, to Arc­tic, to Palm Beach. I have no doubt Gre­tel loves and loved my father dearly.” Edited ex­tract from The Price of For­tune: The Un­told Story of Be­ing James Packer, by Da­mon Kitney (HarperCollins, $45), out on Oc­to­ber 22.

MAIN: RICHARD DOB­SON; VI­CARS PIC­TURE: ADAM YIP

James and Gre­tel Packer at Rock­pool last year; be­low, from left, James with Kerry Packer; Gre­tel with Will Vi­cars; Ros, Gre­tel, James and Erica Packer

SAM RUTTYN

Eller­ston in the Hunter Val­ley was a key bone of con­tention

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