THE BrisConnections debacle will make its Sydney courthouse debut this morning, where the banned company director Jim Byrnes will launch his $1.3 billion claim against the toll-road project and its adviser, Macquarie Group.
With a deadline for unit holders of BrisConnections to cough up the second $390 million instalment just two days away, a short preliminary hearing will be heard in the Federal Court to consider a statement of claim lodged by Mr Byrnes on Friday.
Documents filed by Mr Byrnes allege that BrisConnections had misled investors on several fronts. The claim alleges the road builder’s product disclosure statement omitted “the leverage risk associated with the project”, falsely said the dividend was fixed and that the directors would use 40 per cent of their fees to buy units in the toll-road.
It also alleges BrisConnections made misleading statements to the Australian Securities Exchange and in its accounts.
BrisConnections yesterday shrugged off the claim as a “distraction”.
The documents filed to the court said Mr Byrnes purchased 3000 units in BrisConnections off-market at one thousandth of a cent each. The filing does not say when or from whom Mr Byrnes had purchased the stake worth 3c. His purchase is one millionth the $1 listing price of BrisConnections, or one thousandth of its current price of 0.1c.
Over the weekend Mr Byrnes hit out at questions over the bona fides of the US hedge fund he represents – the New Hampshire Distressed Asset Fund.
On the same day, we saw this number where Macquarie asked for a reprieve:
Macquarie Group Ltd has asked to be struck off a $1.3 billion damages claim brought against it and the troubled manager of the Brisbane airport link, BrisConnections.
But Australia’s biggest investment bank will have to wait to argue its case until May 6, after the matter was adjourned in the Federal Court on Monday by Justice Arthur Emmett.
While Macquarie wanted the matter attended to as quickly as possible, Justice Emmett questioned the need for urgency.
The applicant to the claim filed in the court on Friday is Sydney businessman Jim Byrnes
Only a few days after the last announcement that there might be another attempt at an investor’s revolt, it seems the attempt has been scuttled before it even began.
THE banned company director Jim Byrnes’s plans of leading an investor revolt at BrisConnections have run aground, after a Surfers Paradise finance company aligned with the colourful Sydney business identity scuttled the idea of being installed as the manager of the toll-road.
Less than a week after Mr Byrnes and the supposed US hedge fund he is representing called for a unit-holder meeting to vote on the installation of Armstrong Corporate Capital, the little-known firm yesterday withdrew its interest in becoming the new manager of the $4.8 billion toll-road project. In a letter obtained by the Herald, the law firm representing Mr Byrnes said Armstrong withdrew its consent “due to the recent media speculation about the uncertain future nature of the BrisConnections project”.
However, another explanation could be that the supposed US-based hedge fund fronted by Mr Byrnes – the New Hampshire Distressed Asset Fund – which previously had a 15.2 per cent stake in BrisConnections no longer has the power to call a meeting.
The fund, which acquired its stake (held through Brisbane Toll Road Link Pty Ltd) for a mere $59, or 0.001 cents a unit, is believed to have been struck off as a substantial shareholder in BrisConnections. This is because it has failed to pay its $1-a-unit or $59 million share of the company’s $390 million second listed instalment that was due on Wednesday.
BrisConnections sent reminders to defaulting unit holders yesterday. They are believed to include up to 170 unit holders who bought into the company after its shares dived from $1 to 0.1 cent.
However, it is believed the default could open the way to the ASX delisting BrisConnections. This is because the company will only be left with a handful of shareholders (such as the Queensland Investment Corporation) after the mass default.
BrisConnections said it had only received and processed $102 million of the $390 million payable from unitholders to fund the second instalment. While the company said some payments made by cheque had still not cleared, it is expected Macquarie and Deutsche will need to make up for the bulk of the instalment.
Macquarie meanwhile revealed this morning in its full-year accounts that it had taken a $20 million hit on its sale of the initial stake it had in the toll-road last year.
Or maybe that’s just another indication that these infrastructure investments are actually a crock.
Eat The Rich
All of the market gyrations and spiral downwards has essentially exposed the so-called masters of the Universe for the questionable nut cases we always thought they were. It’s nice to see that the BrisConnections problem is affecting the Macquarie Bank enough to shrink their bonuses this year.
Macquarie Group today underlined the savage impact of the global recession on its business as it reported a 52% fall from last year’s record profit of $1.8 billion to just $871 million this time.
The investment banking group saw its earnings hit by write-downs of $2.5 billion on the value of its listed satellite funds and as a consequence of its involvement in the disastrous float of the Brisbane airport road builder, BrisConnections.
Couldn’t say they deserve the entire pain, but then I couldn’t say they deserved those bonuses in the good times either.