QIC and their investment in Australia's most toxic float - BrisConnections ...
For more than a week Nicholas Bolton has sat in the middle of a crowded courtroom while the legal maelstrom of his creation swirled around him.
The shaggy-haired Melbourne University drop-out, who once worked on the visual effects for the film Scooby-Doo, has sat fiddling with an iPhone and swapping notes with an assistant while coming to legal blows with some of the biggest names in corporate Australia.
See - Brisbane Times - Why BrisConnections has courted battle with unit holders.
posted by Concerned Ratepayer at 8:18 AM
4 Comments:
The Age:
BrisConnections in an unguarded moment
Full Disclosure
IT WAS another dog-day afternoon for the board of BrisConnections, which had to mull over news that the company's biggest shareholder is a 26-year-old owner of an IT company operating from a block of flats in St Kilda.
Nicholas Bolton of Australian Style Investments bought 47,643,166 BrisConnections unit trusts for about $47,600. Except that he owes the company a further two instalments of $1 each, under the deal devised by Macquarie Bank.
BrisConnections company secretary Tamira Herbst has been desperately seeking Bolton, without any luck. "If you speak with him again, ask him to please get in touch with Tamira," said a spokesman.
After visiting Australian Style Investments' HQ in Fitzroy Street, where the office number is written in marker pen on masking tape at the front gate, Full Disclosure has concerns that Bolton may not be able to pay the $95,286,332 he will owe the toll-road company for his shares.
It certainly doesn't have enough cash to employ top-notch security, given the age of the tired and unthreatening mutt selected to guard the company's front door.
But behind that door is the biggest shareholder of BrisConnections, which was floated in July after winning a $3.5 billion contract to build an airport toll road in Brisbane. Shares were issued at $3 each, to be paid in three instalments of $1.
With 12.2% of the company, Bolton now controls more than Queensland Investment Corporation. One wonders if he will use his stock and potential voting power to challenge the position of Trevor Rowe — the chairman of QIC, which invests the superannuation of Queensland public servants, and of BrisConnections.
Fang He, the Melbourne housewife who bought 8% of the company — with a potential $65 million debt to the company — has sold her shares. BrisConnections is desperate for her to file a substantial shareholder notice to discover who now owns the shares
For a second day, staff at BrisConnections ducked questions from BusinessDay, instead choosing to refer them to a PR flack. "It's an unfortunate situation, but we can't say much until we have been in contact with Mr Bolton," said spokesman Mark Gold. "The company has written to him, and tried to call him."
It appears that Bolton, like many small investors, bought the stock using an online account. BrisConnections is adamant that it will collect what it is owed, even if it means employing debt collection services. Bolton may need a bigger dog.
Of course, BrisConnections could send a bill to Macquarie Bank, which put together this dog's breakfast of a deal. It pocketed $100 million in fees.
10:49 AM, March 28, 2009
Perhaps another reason Anna Bligh went for an early election:
Chanticleer: A nightmare on Bligh Street
12 November 2008 | The Australian Financial Review
The smartest guys in the room look to have truly outfoxed themselves with BrisConnections. Sometime in the second quarter of next year, this parody of a listed company will explode into one of the messiest, ugliest and most embarrassing nightmares any government seeking re-election is likely to have to face.
10:51 AM, March 28, 2009
At one point, QIC had a bit over 30 million units in BCS. (They bought 25 million units at the time of the float.)
That's a $30 million investment of Qld money which is now worth $30,000 with a liability to pay another $60 million.
Well done!
10:58 AM, March 28, 2009
Sydney Morning Herald:
Macquarie takes stake in BrisConnections
March 30, 2009
Macquarie Group has taken a 8% stake of debt-leaden BrisConnections and filed a case in the Queensland Supreme Court, in the latest twist in the battle for control of the Brisbane-based toll-road owner.
Macquarie Capital Group acquired 31,429,332 stapled units, or about 8.1%, in BrisConnections, the investment bank said in a statement. The purchase effectively brings with it a $63 million liability, given the company's unusual instalment sting, with each unit owing $2, to be paid in two goes.
The Macquarie move is aimed at preventing 26-year-old shareholder Nicholas Bolton, who owns 77 million shares in BrisConnections, from winding the toll-road firm up before investors holding the stapled units are forced to pay the associated liabilities.
Mr Bolton needs a 75% vote on a resolution to have BrisConnections' trusts wound up, in order to avoid the next $1 instalment per unit.
''From Day One, this was one of the biggest dogs coming on to the market,'' said Tim Morris of WiseOwl.com of BrisConnections. ''It was set in stone this float was going to fail.''
In addition, a related company of Macquarie Group, Macquarie Bank, "today paid a further principal amount of $92.5 million to BrisConnections under the bridge facility previously agreed with the company,'' the bank said in its statement.
Mr Morris said the $4.8 billion BrisConnections project ''had way too much debt and its earnings were years in the future.''
Legal action
Macquarie Group says it intends to begin legal action to ensure its contractual obligations are fulfilled - not against BrisConnections, as initially reported.
BrisConnections securities were recently trading at 0.1 cent.
Mr Bolton ''looks like he's got a bit of strategy'' surrounding his plan to wind the company up, said Mr Morris.
Mr Bolton is ''collecting fees'' from shareholders in exchange for their shares of BrisConnections and the liabilities that come with them, said Mr Morris.
''He's accrued a big enough stake to have the company wound up so maybe with the shares he has acquired he won't have the liabilities to pay it himself.''
Mr Bolton is liable for $149 million through his shareholding, which cost his less than $70 million.
Macquarie Group, underwriters Deutsche Bank and the Queensland Government "are trying to keep the company afloat," said Wise-Owl's Mr Morris.
BrisConnections was awarded a 45-year concession to design, construct, operate, maintain and finance the Airport Link toll road in Brisbane.
Stapled securities in BrisConnections are partly paid securities. There are two further instalments of $1 each per stapled security due by April 29 this year and January 29 next year, respectively, Macquarie said.
The legal mess comes on top of financial missteps. Half-year results released on February 3 reveal that a decision to hedge interest rates on its loans, using derivatives called interest rate swaps, has caused a $476 million black hole, given the recent round of aggressive interest rate cuts by the Reserve Bank.
Retail investors ensnared
With the stock trading so cheaply, retail investors picked up the shares, attracted by the dividend yield, but that too has dwindled to 0.05 cents per partly-paid share for the first half of the 2008/09 financial year.
A majority of BrisConnections shares are now held by individual investors, many of whom were not aware when they bought in that they would eventually have to stump up an additional $2 a share on their holdings and are now looking for a way out.
Macquarie and Deutsche Bank have underwritten the instalment payments and would have to make up any shortfall in the payments due in April and next January.
BrisConnections' major shareholder, Australian Lifestyle Investments, owned by Mr Bolton, has called for a special shareholder meeting to vote on winding up the company, aiming not to have to pay the remaining $2 a share.
In return, BrisConnections has taken Australian Lifestyle Investment to court seeking to wind the fund up because it cannot pay what it owes. The case is going on in the Supreme Court in Melbourne.
12:39 PM, March 30, 2009
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