Bolton moves apace
The Age
Friday July 31, 2009
TWO announcements were made simultaneously in Melbourne and Sydney yesterday, and both involved BrisConnections investor and corporate agitator Nicholas Bolton.At 10am Justice Ross Robson walked into the Supreme Court of Victoria and awarded costs in favour of 27-year-old Bolton's Australian Style Investments after its lengthy legal battle with BrisConnections.At the same time in Sydney, Bolton's latest investment target, Multiplex Prime Property Fund, confirmed to the Australian Securities Exchange what many had suspected €” the company is in breach of its banking covenants. Its financiers have set an August 31 deadline for the fund to get its house in order.In March, BrisConnections tried to have Australian Style wound up after it amassed a $77 million liability by buying the company's listed units, which had fallen to just 0.1 each. BrisConnections lost in court, and Justice Robson ordered it to pay all costs of the 11-day trial."We achieved the outcome we were seeking," Bolton said of his court success. "We are pleased with the outcome."The decision means a chunk of the instalment money received by BrisConnections from unit holders will pay legal bills, largely due to the number of intervenors in the court proceedings. Macquarie Group, Deutsche Bank, the State of Queensland, the corporate plod and Leighton Holdings all sent highly paid counsel to court to keep an eye on various interests.BrisConnections argued that Bolton should pay part of the costs, as the court found his put option arrangement with family friend John Howard Williams was a sham.That option deal allowed Bolton to offload most of his 77 million units to Williams, and avoid paying almost all his $77 million liability.Justice Robson highlighted his ruling on that deal, which the court was told was struck over a glass of red wine at a bar and later signed on the family sofa. "I found that the put option was a sham," Justice Robson said. "In particular, I found that neither party intended it to be legally binding. Nevertheless, I found that entering into the option agreement did not by itself, or in combination with the other matters relied on by Australian Style to establish the lack of propriety in the management of Australian Style, constitute sufficient grounds for a winding up of Australian Style."It makes one wonder why the ASX, in its wisdom, allowed that put option to be exercised.BrisConnections company secretary Tamira Herbst said yesterday: "We believed the legal action had merit, but unfortunately the court didn't rule in our favour."While Justice Robson was reading his ruling in the Supreme Court, embattled Multiplex Prime announced it had breached two banking covenants.The company's property portfolio, worth $640 million this time last year, is now valued at just $567 million€” well below the loan-to-value ratio agreed to with its financiers National Australia Bank, ING and ANZ Bank.Like BrisConnections, Multiplex Prime is a part-paid stapled unit, with a further 40 a unit due in June 2011. Australian Style has amassed 12.56 per cent of the company, and owes about $14 million in future instalments.The banks are owed in excess of $520 million and, due to the covenant breach, can call for the 40 at any time. The trio has agreed to give the company a stay until August 31.Multiplex Prime is ruling out sale of assets, which means the company must raise more capital, or renegotiate its banking covenants, in the next month. It's a challenge for fund manager Lawrence Ho and team.Bolton won't reveal if he will use his BrisConn tactic and call a meeting of unit holders to remove the responsible entity that runs Multiplex Prime, or have the company wound up.Asked if Australian Style had the money or finance in place to pay a potential $14 million instalment on its units, Bolton said: "I don't have a comment on that."Asked if he had a put option agreement, verbal or written, to offload Multiplex Prime units before the instalment being called, Bolton said: "No. An adamant no."The independent valuations released by Multiplex Prime provide a snapshot of the sorry state of the commercial property market.The value of the property trust's four assets €” in Melbourne the Defence Plaza and 25 per cent of Southern Cross Tower, and in Sydney the American Express Building and a half share of the Ernst & Young Centre €” has plummeted by 7.8 per cent in the past six months, wiping $47.7 million from the value of the fund's assets since December 31.Plenty of wriggleNOT many will have heard of listed computer parts importer Wintech Group, but National Australia Bank's decision to call in the receivers at one of its subsidiaries has opened a can of worms.NAB is owed $5.1 million by Magnafield Technology Distribution and has appointed Timothy Norman of Deloitte Touche Tomatsu as receiver and manager.Magnafield has included a number of colourful business characters as directors or part-owners. These include Leo "The Gun" Khouri, who is a past director.A current director is Peter Jermyn, the chairman of Joe Gutnick's old company Astro Diamond Mines, which also boasts Khouri as an investor.At a meeting of Astro shareholders back in 2007 Jermyn sat alongside Robin Armstrong, the former chief of Findlay Securities' corporate department.Findlay was, of course, the listed stockbroking firm once raided by the Federal Police, and it also pops up as a past owner of a stake in Magnafield.Armstrong even served as a director of Magnafield at the very same time as Khouri.Another name that pops up in Magnafield's past is United Hotel Group, which once provided a loan to the company. It's owned by Mick Gatto's mate John Khoury.And then Full Disclosure notes the legal action in the Federal Court between Wintech and a company owned by Tom Karas, the man who famously confiscated Horty Mokbel's horse Pillar of Hercules for non-payment of a debt.Mr Norman, we wish you luck.That takes the flakeFULL Disclosure caused reader Bill Kosky to "choke on his cornflakes" after he saw the law firm that bears his name was doing some business with a company called Gatto Corporation.While Mr Kosky is still listed as a contact on the company website, and his picture is there, he tells us he retired from practising law "some years back" and doesn't do any business with the suburban firm Hayton Kosky."As far as I can recall, I have never met, or had any dealings, or contact, with Mick Gatto," he said.Apologies for disturbing your breakfast.
© 2009 The Age
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