Shares in Surfers Paradise-based property developer Raptis Group Ltd have been suspended after one of the group’s financiers appointed a receiver to "entities associated" with one of its major developments on the Gold Coast, the $700 million Southport Central project.
It’s more evidence of the property crunch hurting parts of Queensland with City Pacific and the old MFS business both staggering with high debts and not to much in the way of assets or cash flow to try and battle their way through.
Another Gold Coast property finance group, Asset Loans, was placed in receivership this week.
Raptis requested they be suspended yesterday after the receiver was appointed to some of these related entities by a local finance offshoot of the HBOS Bank of Britain.
As a result, Raptis said yesterday that it is seeking funding alternatives and needed a two-day trading halt.
"The directors are considering funding alternatives and seeking advice before taking appropriate action," it said in a statement to the ASX.
The company has over $600 million of short term debt due within a year, and assets to meet this of just under $500 million of real estate and apartments, which are declining in value.
The news came just under two weeks after the company told the ASX late on August 29 that it had suffered a 16% drop in revenue and a big write-down that plunged the group into the red to the tune of $13.9 million.
As well the company’s accounts and directors’ report indicated that it could only survive with the support of its lenders who had advanced the company more than $US760 million as at June 30.
Capital Finance Australia Ltd, part of HBOS Australia, which also includes Bankwest of Perth, took action against those entities of Raptis involved in Southport Central.
The Southport Central project in Queensland which is in various stages of completion is a major development for the established Gold Coast property group.
Raptis said in its annual earnings report on August 29 that:
"The stage two 40 level tower of Southport Central was completed and settlements of residential units commenced on 28 April, 2008. At 30 June 2008 a total of $113.7 million had settled. The stage three 40 level tower is scheduled to be complete and commence settlements in December 2008.
"We presently have 227 apartments to sell and 14,000 square metres of office space for lease or sale between the two towers and based on the current rate of sale (of 30 units per month) we expect to sell out the completed units and strata office space in Southport Central by June to December 2009."
Obviously Capital Finance was unimpressed with the sales plan, or rather, the rate of sales.
Raptis shares last traded at 40c, which was a 52 week low. They fell from 80c just before the earnings report, to the 40c mark in the space of less than a fortnight as investors fretted about the company’s viability.
In the earnings statement to the ASX, Raptis said that "During the year ended 30 June 2008, the group derived a profit from trading operations of $6.5 million; although a fair value write down of real property investments of $20.5 million due to current conditions produced a net loss for the year after tax of $13.9 million".
The company’s main lenders, include Capital Finance, the ANZ Bank, Suncorp Metway and St George.
Suncorp is struggling with poor returns from its insurance business, St George is preparing to be merged into Westpac, but has a nasty worry with over $400 million of debt with Centro Properties and the ANZ has written off over close to $2 billion in bad debts and provisions on dud loans.
ANZ Bank is understood to have an exposure of more than $100 million to the company, and media reports say it put more money on the line through a funding facility in February.
Raptis Group must repay or refinance about $670 million of loans before the end of the current financial year.
The August 29 directors report revealed that the financial report has been prepared on a going concern basis "reflecting the directors’ opinion that there are reasonable grounds to believe that with the continued support of the Group’s financiers, the company can and will be able to pay its debts as and when they fall due.
"As shown in the balance sheet, the Group currently holds $496 million in current assets (valued at the lower of cost and fair value) and $765 million in current liabilities, including $669 of interest bearing debt.
“This includes $87 million in loans that are not due for settlement with 12 months however are classified as current as it has been decided to sell the underlying asset. Net assets are positive at $10 million.
"Development inventories are carried at cost, at current valuation the net assets would be $110 million.
"The company has historically financed its development projects on a short term basis as a development site moves through the various stages of approval until construction finance is appropriate.
"The recent shortfall in liquidity in world finance markets has impeded this process.
“The directors are in negotiations with the group’s major bankers and expect the current term loans will be extended or replaced by financiers as required, pending extinguishment from asset sales and completion of the current major Southport Central and Hilton Surfers Paradise Hotel and Residences projects.
"Accordingly, whilst the Directors believe our funding partners will continue to work with us to complete the existing projects and maximise the return on the development sites held, the a
