Tag Archives: BrisConnections

BrisConnections Update

They Should Get Out Of Forecasting

This BrisConnections thing was pretty interesting a few years ago, but now the privately owned tunnel has hit the wall.

BrisConnections shares went into a trading halt on Monday, November 14, at 0.4¢ each, when the board announced the $4.8 billion project could now be worth less than its outstanding debt, due to lower than expected traffic flows. It is now renegotiating with a 10-bank consortium of lenders. Two directors, Andrea Harcourt and Richard Wharton, resigned on Monday.
Back in 2009, Mr Bolton made front page news when he called a BrisConnections shareholders meeting to vote on winding up the project.

Here’s Nick Bolton with the crux of the problem:

‘‘A tunnel can cost seven times more to build than an above ground toll road, and a driver is unlikely to pay seven times the toll to travel on it.  Accordingly, it is almost impossible to get the economic argument to stand up for private ownership of tunnel infrastructure,’’ the Melbourne University drop-out turned internet millionaire turned celebrity investor told BusinessDay.

‘‘The concerning element is how neatly the traffic forecast seemed to fit the financial model put to investors, and how grossly inaccurate this forecast has turned out to be.  It’s worthwhile asking why that traffic forecast was selected, and whether there were any less optimistic forecasts available to the Directors at the time.’’

All of which is eminently sensible, and has been shown in court that entities such as Macquarie Bank continually use the same model to suite their purpose when raising money for these crappy schemes.

In fact the scuttlebutt doing the rounds is that Infrastructure NSW used the same ‘forecasting’ system to run their argument in favour of their ‘WestConnex‘ pitch. If that were the case, then we’ll probably end up seeing yet another replay of the Cross City Tunnel, Lane Cove Tunnel and this BrisConnections misadventure.

Leave a comment

Filed under General

BrisConnections Disconnenct Part X

A Mess Is A Mess Is A Mess

After ASIC went and got the verdict it wanted against the Hardie board of directors, I’m sort of wondering when they will go after the financial engineers who engineered BrisConnections. Here’s the latest.

BrisConnections, meanwhile, disclosed Macquarie Group reaped $133.8 million in underwriting, listing, management and other fees. Deutsche made $44.7 million in fees.

The company reported a $24.4 million net profit, largely thanks to the interest it earned from cash held in the bank. BrisConnections stated it had spent $880 million on construction expenses and had $187 million on hand on June 30.

Reflecting the turmoil within the group, BrisConnections also disclosed it held 27 board meetings during the year.

Despite BrisConnections launching legal action against unitholders who defaulted on the second instalment, the group is not legally obliged to repay the underwriters.

Under a clause in the underwriting agreement, BrisConnections is obliged to transfer only units forfeited by 135 unitholders who did not pay the second instalment to the underwriters.

Does this strike you as odd? It seems that they foresaw there would be defaulters, and the defaulters would be pursued for their money, BUT the underwriters won’t be held to the same price tag. Somewhere along the path, they didn’t expect Nick Bolton but they did expect people would scream. Go figure that one out.

Leave a comment

Filed under General

BrisConnectons Update

Auction Sees No Takers

Are we even surprised?

Troubled developer Brisconnections has failed to sell any of its defaulted partly paid units put up for auction.

The manager of Brisbane’s Airport Link toll road had offered more than 70 per cent of its issued capital at auction in Brisbane on Friday after the partly paid units were defaulted following a second instalment date.

BrisConnections offered stapled units at $3 each when it floated last year, with $1 payable upfront and two further $1 payments due nine months and 18 months after the allotment date.

The second instalment was due on April 29.

Under the trust’s constitution, all securities in which the second instalment remains unpaid were defaulted.

About 278 million securities were offered for sale at the auction, just over 70 per cent of the 390 million securities issued.

The securities were offered at a reserve price of $1 each, in lots of 500 units or more.

As predicted, nobody wanted a bar of this thing. Why would you bid on something you can get for 0.0001? Why would you bid on something next to nix, that comes with a $1.00 liability per unit? The mind boggles, but there you go. More disturbing is this bit here:

Earlier this week a legal effort to wind up Brisconnections was dismissed in the Federal Court.

Securityholder Jim Byrnes was seeking to recover damages including the loss of value of BrisConnections units, which slumped to 0.1 cents by October last year.

Mr Byrne’s case, alleging investors were misled in the project through statements and errors in the product disclosure statement, was dismissed on Tuesday.

That’s more of a worry because it means the Federal Court doesn’t see a problem with the projections offered in the prospectus, which are allegedly wish-casting guesstimates designed to sell, rather than works of proper forecasting.

I guess justice won’t prevail and this thing gets built even though it’s going to be a white elephant like the Sydney Cross-City Tunnel.

Leave a comment

Filed under General

BrisConnection Blues… I Mean News

No.1: They’re Tunneling

Work has begun on digging this tunnel.

BrisConnections have announced the start of 24-hour tunnelling on the multi-billion dollar Airport Link and Northern Busway project.

Two 15-metre long roadheaders – huge rock cutting machines – are underground at Bowen Hills and Windsor on Brisbane’s north side, excavating the twin mainline tunnels for the project.

Another nine roadheaders will start tunnelling soon, with each excavating up to 2,500 cubic metres a week.

Later this year, two more 3,000-tonne boring machines will arrive in Brisbane – they’ll start work in 2010.

CEO Dr Ray Wilson said that while substantial progress had been made since the project started seven months ago, the rate of advance would increase significantly with around-the-clock work.

Why does that read like, “get the job done before the shit hits the fan”?

No.2: They’re After Nick Bolton

You can’t blame them really, but who knows what they’ll squeeze out of the lad.

A formal demand for payment was sent to Mr Bolton last week and the Brisbane airport link road company is adamant that his case will be placed with debt collectors if he does not meet the latest request to hand over what he owes. Court action could then follow.

Mr Bolton, who led a shareholder revolt to try to wind up the infrastructure business before the second of the three $1-a-share instalments was due, received $4.5 million from the road’s builder, Leighton Holdings, for the voting rights on his 19.8 per cent stake in Brisconnections.

His deal with Leighton Holdings, which helped ensure that the winding-up move failed at the meeting Mr Bolton himself had called, has indicated to Brisconnections that he has the money to meet the debt demand.

Mr Bolton had successfully transferred the ownership of almost all of his 77 million units to a family friend, John Williams, which meant he was freed from the liability of paying the latest $1 tranche per unit that became liable on April 29.

But he missed the transfer deadline on two small parcels of units, of 800,000 and 500,000 units. Sources say he sought to email the details to the company in the hours immediately after the qualifying closing time.

He remains the legitimate owner of the stock and is therefore required to pay the second instalment on them.

Bummer, dude. I’m sure the other Unit holders he betrayed are not shedding any tears for him on that account.

What’s really disturbing about the whole exercise is just how crooked and stupid the big end of town is when it wants to cream off the public purse for money and failing that, how they want to gouge mum and dad investors. It’s disgusting how government – that would be you, Ms Anna Bligh in Queensland – sits back and watches as the whole thing turns into a shit storm, and all for what? A couple of tunnels that Brisbane may not need at all. It’s a disgrace.

Leave a comment

Filed under General

BrisConnections News

Recycling Trash

The defaulted BrisConnections securities are going to be packaged up and sold again.

Nearly 280 million Brisconnections securities – more than 70 per cent of the group’s issued capital – will be auctioned next month after they were defaulted following a second instalment date.

BrisConnections offered stapled units at $3 each when it floated last year, with $1 payable upfront and two further $1 payments due nine months and 18 months after the allotment date.

The second instalment was due on April 29.

Under the trust’s constitution, all securities in which the second instalment remains unpaid are to be defaulted.

“These defaulted securities will be offered for sale at a public auction,” Brisconnections said in a statement today.

It is estimated approximately 278 million securities will be offered for sale, just over 70 per cent of the total 390 million securities issued.

The securities will be offered at a reserve price of $1 each, in lots of 500 units or more.

The auction will be held in Brisbane on June 5.

So, let me get this straight… These people originally sold something encumbered with a $3.00′ liability for 1 dollar, and it plunged through the floor. Once defaulted, they’re going to recycle the defaulted ones and exempt the $1.00 due this year, but try to get the last of the $1.00?

So they’re Auctioning something that actually will have a net value of $0.00 with a starting price of $1.00? Why isn’t ASIC investigating these guys?

Leave a comment

Filed under General

More BrisConnections News

Comfortably Dumb

I missed this one by the way, what with all the excitement going on.

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.

Leave a comment

Filed under General

BrisConnections Chaos Continues

Mac Bank Earns World Of Trouble

Of course it’s not going to help the sense of chaos that characterises the whole BrisConnections venture. Now, the second largest shareholder has decided to go for management control.

The company’s second-largest shareholder, represented by Jim Byrnes, and a mysterious finance company in Surfers Paradise have launched a bid to secure management control.

Less than a fortnight after a proposal to wind up the project was voted down by unit holders, BrisConnections said yesterday it had a received a request from Brisbane Toll Road Link, which owns 15.2 per cent.

The request was for a second meeting to consider the appointment of Armstrong Corporate Capital to replace the BrisConnections Management Company.

Another request was for the second $390 million instalment call for BrisConnections shares, due on Wednesday, to be delayed until “Armstrong notifies members that it is due and payable”.

New Hampton Distressed Asset Fund is the owner of BTR but Macquarie and advisers close to BrisConnections are questioning whether the US hedge fund exists.

But Mr Byrnes said in an email last night: “The company does exist.” He provided no other information and declined to answer the Herald’s questions or identify who was behind the fund. According to Australian Securities and Investments Commission documents, its address is the same as Mr Byrnes’s home address. Mr Byrnes also lodged a statement of claim in his name in the Federal Court yesterday, as part of his planned $1.3 billion class action against the toll road’s advisers, Macquarie Capital Advisers.

BTR director Carl Trad, an importer of luxury cars, declined to say how he became involved with the company, except: “I’ve had some really good advice.”

When the Herald phoned the Armstrong office in Surfers Paradise, the unidentified person who answered the phone said: “I’m sorry, I’m not giving any interviews to the press, thank you.”

The problem for BTR is that even if a meeting is called, the earliest date it could be held is May 12, three days after the final deadline for it to pay the second installment. A Macquarie bid to buy out 80 per cent of the unit holders would do little to solve the problem of many in dire financial circumstances if they were forced to pay the installments.

Don’t you just love the way the craziness begets more craziness?

It’s enough to wonder when ASIC is going to step in and fix this thing. Leaving it to the unit holders or Macquarie Bank or eve this new bunch out of Surfers Paradise is a surefire recipe for horrible repercussions where the tunnel might not get built.

Then there is the consideration whether if Brisbane really needed this tunnel in the first place, and whether Mac Bank were up to their usual tricks in inflating forecasts for just how much traffic is going to use this lousy toll road when current roads already service the airport just fine. It’s certainly starting to stink of the same graft and greed routine that plagued the Sydney Cross-City tunnel fiasco all over again, and surely ASIC has to be wondering if Mac Bank was acting in good faith when it launched these partially paid units. Because so far, if the past record is anything to go by, there’s a lot that “goes to character” sying they were acting in much, much, much less than good faith.

Leave a comment

Filed under General