Executive Summary: December 15, 2009
By Scott Rochfort | smh.com.au | 15 December
Philip Adams ... hanging on to another battered palm. Cartoon: Michael Mucci
CBD
Hegde fund could be back for seconds
The former Babcock & Brown affiliate Everest Capital looks set to face another challenge.
There is talk at least one rival investment firm is hoping to snare control of another of the embattled group's funds.
It is rumoured the same Isle of Man-domiciled hedge fund that wrested management control of the listed Everest Babcock & Brown Alternative Investment Trust in February is looking for seconds.
Laxey Partners, which was chosen by an overwhelming vote to replace Everest as the responsible entity of the Alternative Trust, is believed to be planning to lobby unitholders in the Everest fund that invested in the "deal flow" (aka debt) produced by B&B - the Babcock & Brown Income Fund.
This was the same $170 million fund from which one Everest founder, Jeremy Reid, withdrew his own funds just months after pledging to put more money into a July 2007 raising, which was later aborted.
Reid and his co-founders did not include that original pledge to double their investment to $60 million in the documents that later accompanied its September 2007 raising.
Reid's withdrawal of the bulk of his units in the Income Fund in 2008 seems not to have impressed some investors who are yet to redeem all of their investments.
The biggest investor is the eastern suburbs anaesthetist Joe Ross, who put $50 million into the fund. He is now suing Reid and Everest, claiming to have been misled when he injected $25 million in the 2007 raising.
Couple of coins
Another former associate of Babcock & Brown, GPT, has showcased its ability in reading investment cycles.
The property firm announced yesterday that it was "pleased" to sell its London-based Halverton asset management arm for €2 ($3.20). GPT and B&B bought their initial half stake in Halverton in 2006 for $25 million.
Palm in a gale
Philip Adams, the co-founder of the sunken Gold Coast financial engineer MFS (aka Octaviar), could be forgiven for having a sense of deja vu.
Adams, who left Australia to help MFS's expansion into Dubai before the firm's multi-billion dollar collapse, might be getting the wobbles living on one of the fronds of the giant man-made palm tree island which juts out of the emirate.
Yesterday Nakheel, builder of Palm Jumeirah, was desperately seeking a reprieve from the repayment of a $US3.52 billion ($3.9 billion) bond issue that is due.
At the time of its listing, it was the largest listed sukuk (Islamic bond) on issue. Adams, meanwhile, continues to keep a low profile.
Last month he was sent a bankruptcy notice from the liquidator of Lift Capital, McGrathNicol. Adams and MFS co-founder Michael King took $13.7 million in loans from Lift.
Altogether, they had $127.2 million in margin loans over their now worthless 13 per cent stake in MFS.
While King struck a two-year insolvency agreement with creditors in August to avoid bankruptcy, Adams has so far proved harder to track down.
Price is right
Adams appears to be struggling to find clientele for his corporate consultancy in Dubai, Agilis Global.
The firm still has Stuart Price listed as its chief executive, despite the former head of MFS's international (aka Dubai) operations having returned to Australia midway through the year.
Price is now chief executive of the Adelaide law firm Kelly & Co. On the Kelly & Co website Price appears coy about his recent job history.
It notes his time as head beancounter at Elders Rural Bank but makes no mention of MFS, where he worked for two years before helping set up Agilis.
When the Herald contacted Price he said he was tied up in a business lunch and would have to call back.
He failed to call and also appeared to have his phone on message bank for a large part of yesterday afternoon.
Flying rock
The Qantas budget offshoot Jetstar has played down speculation it is the The Rock Building Society of the airline sector.
One week after Westpac's retail banking boss, Peter Hanlon, declared the bank was not the Jetstar of the financial sector, the low-cost airline has refused to say which bank it compares itself to.
"We're not the Jetstar of banking but we do know we are the Jetstar of airlines," was the response of the airline spokesman, Simon Westaway.
Meanwhile, the Westpac of banking has again failed to provide a translation or internet video of a really complicated transaction it engaged in yesterday.
The credit agency Moody's announced the bank had issued $1 billion of residential mortgage-backed securities and assigned an Aaa rating to the largest tranche of the debt.
"The ratings also take into account the liquidity facility and the experience of Westpac in servicing residential mortgage portfolios," said Moody's.
What the ratings agency was trying to say was that Westpac had borrowed a very large bunch of bananas.
It then broke up the bunch and lent single bananas at a higher interest rate to a large group of monkeys.
These bananas were turned into a bunch of profits for Westpac. When the bananas were returned Westpac liquefied them into a giant banana smoothie.
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Briefs
Emirates
Dubai rescue Abu Dhabi has provided $US10 billion ($10.9 billion) to help Dubai World, the state-owned holding company, meet its debt obligations, including $US4.1 billion needed to repay an Islamic bond maturing today for the country's embattled property developer Nakheel.
Dubai will use the rest of the money to pay "trade creditors and contractors, as well as meet interest expenses and company working capital through April 30, 2010", the Dubai government said yesterday.
Resources
BC Iron venture An iron ore joint venture at Nullagine in Western Australia between BC Iron and Fortescue Metals looks set to go ahead, after trial mining exceeded expectations.
Property
Primelife go-ahead Lend Lease has received approval to acquire the units in Lend Lease Primelife, a retirement homes and aged care provider, that it does not already own for 35c per share.
Drugs
ChemGenex deal Cancer drug developer ChemGenex has struck a deal with Hospira Inc to license, develop and commercialise ChemGenex's compound to treat chronic myeloid leukaemia.
Markets
Traffic IPO shelved Traffic solutions provider The Traffic Group has cancelled plans to list on the stockmarket after failing to raise the minimum $2.5 million in capital.
Mining
Polaris takeover Mineral Resources has claimed victory in its takeover battle for Polaris Metals, beating off Lion Asia Resources. Mineral Resources said it now controls 51.29 per cent of Polaris.
First published by Smh.com.au on December 15 2009
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