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A con job to shake DJs

ELIZABETH KNIGHT July 07, 2012

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Boots made for walking and that's just what the mysterious John Edgar did ...

IT STANDS to go down as the great David Jones retail heist of 2012. Yet its execution is more reminiscent of the bumbling Arthur Daley of Minder than the slick Brad Pitt in Ocean's Eleven.

In the space of a week, John Marshall Edgar - an unknown 42-year-old Scottish punter - appears to have perpetrated one of the most damaging takeover stunts in Australia's corporate history.

A hit-and-run with no sign of corporate number plates.

His target was shareholders in the grand dame of Australia's retail industry, David Jones, and from what BusinessDay can piece together, the motive is what most are now calling market manipulation.

It has the classic hallmarks of buy on an engineered rumour and sell on fact.

Question marks remain over whether that part was a success. This will be determined by the corporate regulator.

Edgar leaves almost no corporate trace. Domain searches of his bidding vehicle EB Private Equity reveal he is behind a series of £1 defunct companies - most of which were co-directed by what appears to be his 84-year-old mother.

His great claim to fame is marketing a diamond encrusted $6 million bottle of halal non-alcoholic ''whisky'' (the existence of which can't be established). His various phone numbers lead to a dead end, his private equity company is a post office box in Britain's Newcastle-upon-Tyne and his last stated residential address is a pokey flat above a shop in a low-rent area of Scotland.

Australian investors have been had.

The scene was set on Thursday last week when David Jones received its second approach via email from EB Private Equity, saying it was interested in making an offer of $1.65 billion for the company.

David Jones was sceptical and chose not to release to the market this, or Edgar's first approach a month earlier. Under normal circumstances the offerer would be grateful. A suitor would prefer the offer to be kept under wraps so that the share price would remain low.

But these were not normal circumstances.

Despite David Jones' desire to keep the news quiet, by Friday morning the company was under siege from the media, which had been alerted to a website with offer details.

An unknown source had told a news agency about the blog containing details of the offer and warned that if it did not run the story, another news outfit would be alerted. The news agency, and then a major offshore newspaper, attempted to verify the contents with David Jones but to no avail.

Someone wanted the story publicised. Someone wanted the share price to go up.

Logic suggests that Edgar was probably behind this highly irregular ''pop up'' blog, which had been set up only weeks ago. It contained details of the ''financing'' of the David Jones bid (known only by Edgar and David Jones) while all other posts on the blog seemed to be cut and pasted. Edgar's connection to the blog cannot be proved by BusinessDay.

Meanwhile, in the Australian market no one paid too much attention to who was behind the offer, nor where the news had come from. Speculators dived in and the stock shot up 15 per cent. To punters the stock was in play.

Attempts by David Jones to hose down the story were useless. Its suggestions by the company's stock exchange announcement that the offer should be viewed cautiously were lost in the buying frenzy.

The saga took an even more bizarre twist over last weekend. Having digested Friday's announcements, some media outlets had started to question the offer and published reports on Saturday to that effect.

Edgar seemed concerned that his offer was being questioned. The virtually invisible announcements came out into the open as he hired a well-known financial public relations company, Cannings, to organise a series of interviews with the main financial media to shore up his legitimacy.

On Sunday, he spoke to BusinessDay about financial motives, claiming the deal was a property play. But he refused to nominate any previous deals, saying only that they had been in Africa and America.

He said his company's first offer for David Jones had been rebuffed as too low and said the company had sought more detail on his financial position and his ability to fund the bid.

He was unconvincing. By Monday morning the share price started to tank.

By Monday afternoon, EB Private Equity, its principal John Edgar and its offer for David Jones had disappeared. But in his wake raged an angry investor lynch mob - who were $175 million poorer - and asking questions of how Australia's oldest department store retailer and regulators could have fallen victim to an apparent amateur conman.

Edgar's EB Private Equity came from nowhere and despite rigorous searches, meaningful corporate records cannot be found. No photos, no profits, no backers and no friends. Nothing.

About this phantom there are almost no substantive leads. We know his age, his nationality and from evidence pieced together by The Age, we understand he hails from a Scottish working-class background.

There is no suggestion he has tried to undertake this kind of large-scale deal in the past.

Indeed, he is the perfect invisible type to undertake such a bold corporate sting.

Meanwhile, evidence collected by The Age suggests the deal had been some time in the planning.

Several months ago, Mr Edgar approached Australia's largest domestic investment bank, Macquarie, asking about arranging debt finance for a proposed offer for David Jones. The deal-hungry bank asked him to present his bona fides. None were forthcoming and a bank spokesman said it never heard from EB Private Equity again.

Across the globe, Mr Edgar had also approached multinational property group, Jones Lang LaSalle and British finance outfit Chalkhill. Both say they never accepted the EB Private Equity brief.

Yet all three were cited by Edgar as advisers in various ways. Macquarie was named as the co-ordinating institution for EB Private Equity's lending in an offer letter sent in May to David Jones chairman Bob Savage. The other two were named on the mysterious blog.

Macquarie was soon alerted to its apparent involvement by David Jones' advisers Gresham, while Jones Lang Lasalle and Chalkhill were patched in on their supposed role after receiving a flood of media inquiries last week.

Some additional digging suggests that claims of ties to established companies is part of Mr Edgar's modus operandi.

Back in the early 2000s there are reports from New Zealand that he had set up an online financial services website partnered with financial services giant AMP. AMP has no knowledge of Mr Edgar.

This early 2002 appearance is one of the rare times that he appears to have placed his head above the parapet.

The New Zealand registered company Goodinvestor claimed to be interested in giving a portion of its profits to charity. But NZ company records show it never made any and it has since been dissolved.

About the same time, Edgar's company, Ellen's Brands, set up shop in Australia - or Darwin, to be precise. BusinessDay found his co-director in that company, William MacDonald, who said he had never met the Scotsman and had no idea what business the company was engaged in. He noted only that it had issues with the Australian Tax Office.

The only person that has come forth as having had dealings with Mr Edgar is an Australian fashion model who contacted The Age last week with her bizarre story of having been hired by him five years ago in Britain for what she said was supposed to be an advertising shoot for a major Australian department store.

It took the slender blonde a year and two legal threats to be paid the £700 she was owed.

But it's an assignment she will never forget. She said the girls were modelling cheap clothes, posing with bottles of high-brand alcohol and perfume with labels removed. The menswear was being showcased by a page three topless woman wearing what appeared to be Edgar's oversized and unbuttoned shirt.

The last word on Mr Edgar may come from no lesser light than the Queen.

Searches show a wine merchant, ''By Appointment'' to both her majesty the Queen and HRH, the Prince of Wales, was selling a ''Goodinvestor.com'' mixed French case - ''A selection of six red and six whites sourced from some of the very finest French producers.''

One wonders whether the labels had been removed and whether the royals were sipping cleanskins.

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