Adsteam collapse adds to State Bank's demise and John Martin's lost to interstate control

John's Martin's, a South Australian retail tradition (its Rundle Street store is pictured in 1934) , was lost in the Adelaide Steamship 1980s takeover.
Image courtesy State Library of South Australia
 

The lack of transparency of the AdSteam Group of companies, with their complex cross holdings, caused rising concern in the late 1980s.

When a 25c dividend (per share) against a much lower share price was announced at the 1990 annual general meeting, investors fled the company and its shares crashed from over $5 to under $1 in one day.

The 200 banks’ demand for return on their loans to the group forced a receiver-type arrangement in 1991 for an orderly selloff of Adsteam group assets.

The arrangement included “The Adelaide Steamship Company^” becoming “The Residual Assco Group^”. National Foods, Woolworths (in 1993 as the biggest share sale in Australia’s history), David Jones and Adsteam Marine were assets all successfully floated on the stock exchange.

But, in the end, Adsteam's loss of $4.49 billion represented one of Australia's largest corporate collapses.

The collapse of Adelaide Steamship has been called “a humiliation for the accounting profession”. It did lead to major change in Australian accounting rules. It also presented lessons for banks and auditors. Legal fights over the Adsteam collapse continued for years.

For South Australia, the effect was to lose a home-grown company that had achieved national success in several areas.

The exposure of the State Bank of South Australia to the excesses of Adelaide Steamship’s 1980s management contributed to that state government entity’s collapse.

Another side effect was that the David Jones takeover of John Martin’s stores took its management focus interstate and lead to the demise of that South Australian icon.