Samuel furious as DFO teeters on insolvency

While Mr Samuel is believed to be furious at the decision, which he only learned of in the past six weeks, it is believed unlikely he will take legal action, Those close to the Austexx group say his argument should be with his trustees, who are believed to have approved the deal.

http://www.smh.com.au
August 18, 2010

Samuel furious as DFO teeters on insolvency
Ben Butler

AUSTRALIA'S competition chief, Graeme Samuel, is believed to be furious about multimillion-dollar deals that have compromised his investment in a big chain of shops.

DFO's owner, Austexx, is teetering on the edge of insolvency as it struggles with debt of about $1 billion.

Austexx was founded by millionaires David Goldberger and David Wieland, with investment from Mr Samuel, who is chairman of the Australian Competition and Consumer Commission.

But financiers are concerned about the performance of DFO's shopping centres, which provide Austexx's cash flow.

Austexx's directors last night were locked in urgent talks with a syndicate of four banks owed $450 million as they tried to find a buyer for some of the outlets.

About $112 million is believed to be owed to each of Suncorp-Metway, St George Bank, National Australia Bank and Bank of Scotland International.

If a quick sale cannot be made, Austexx executives, Mr Goldberger and Mr Wieland, may have to reach into their own pockets to help pay a further debt of up to $100 million.

Liquidation of the Austexx group would also wipe out Mr Samuel's investment in the group, worth up to $100 million.

Despite NAB's presence in the bank syndicate, Mr Samuels is unlikely to step aside from adjudicating on the bank's bid for AXA in his role as ACCC chairman.

Mr Samuel's investment in the DFO chain precedes his appointment as ACCC chairman in 2003.

On accepting the government job, his investment in the DFO chain was isolated to a 25 per cent shareholding in a company called Austexx Pty Ltd, which owns four retail centres, including Melbourne's Spencer Street complex.

And the day-to-day management of Mr Samuel's interest was put in the hands of three trustees: former union leader Bill Kelty, businessman Andrew Kroger and Austexx's chief executive Geoff Porz.

To carry on new developments, the other investors set up a separate company, Austexx Corporation Pty Ltd, which does not count Mr Samuel as a shareholder.

Loan documents show that just before Christmas Austexx Corporation gave the bank syndicate extra security, including guarantees from four DFOs owned by Austexx Pty Ltd.

While Mr Samuel is believed to be furious at the decision, which he only learned of in the past six weeks, it is believed unlikely he will take legal action.

Those close to the Austexx group say his argument should be with his trustees, who are believed to have approved the deal.

Mr Kelty and Mr Porz resigned as trustees in early July, and it is believed James Packer lieutenant Guy Jalland has been appointed as a new trustee.

A separate loan document for a mezzanine loan, signed in September 2008, also includes guarantees from two Austexx entities.

In addition, it shows that Mr Goldberger, Mr Wieland, Austexx chief executive Geoff Porz and director Frank De Rango have given personal guarantees.

The mezzanine loan has a limit of $180 million and is believed to be drawn down by between $50 million and $100 million.

Source: The Age

http://www.smh.com.au/business/samuel-furious-as-dfo-teeters-on-insolvency-20100817-128ke.html


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