If BrisConnections rejects the wind up motion at next week’s unithholders meeting in Brisbane, Macquarie will help out: if there’s a wind up vote, then all those people with the "cheap’ securities with $2 still to pay will have to cough up.
The proposal BrisConnections referred to Monday has turned out to be not a cheap $39 million takeover, but a blatant bit of corporate pressure at its worst.
Put simply Macquarie Capital Advisers and its co underwriter, Deutsche Bank won’t chase anyone for the first payment of $1, due on April 29 (the second is due next January).
The proposal allows retail investors to default on the second $1 a unit instalment payment, due on April 29, in the knowledge they will not be pursued for the debt – on the condition that none of the resolutions proposed by rebel shareholder Nicholas Bolton are successful at next week’s meeting.
Institutional holdings will not be included: that presumably covers Mr Bolton’s Australian Style company and the newest shareholder, Brisbane Toll Road Link, fronted by Sydney identity Jim Byrnes.
The two banks will split an estimated $270 million write-off under the proposed deal to cover the cost of defaults – about 70% of the 390 million BrisConnections units on issue are estimated to be held by retail investors.
A vote to wind up BrisConnections will be held in Brisbane on April 14. If any of the resolutions proposed by Mr Bolton are successful, the proposal will be withdrawn.
The co-underwriters are effectively buying the votes of retail investors ahead of April 14 meeting.
A wind up vote could trigger provisions in the company’s banking covenants that allow senior lenders, including ANZ, to withdraw more than $3.1 billion of finance for Brisbane’s Airport Link project, and jeopardise the future of the $4.8 billion Airport Link project.
Institutions, including the Queensland Investment Corporation and Macquarie Group, will still have to pay $1 for each unit they hold on April 29.
This is what BrisConnect said was the Macquarie/Deutsche offer:
“Under the proposal Macquarie and Deutsche would not require retail BCS unitholders (as at record date of 3 April 2009) to be pursued for the instalment of $1.00 per BCS unit payable to the BCS responsible entity on 29 April 2009, provided that all resolutions to be put to the forthcoming BCS unitholder meeting1 (“Resolutions”) are not passed.
"This would apply only to BCS’s rights against unitholders personally. Units where the call is not paid would still be forfeited in accordance with the BCS constitutions and the underwriting agreement, but no further action would be taken against the retail unitholders.
"Any such proposal would only be available to retail unitholders if all Resolutions are defeated. No proposal has yet been agreed and there can be no assurance that any proposal will be agreed."
and here’s the
for the April 14 bunfight in Brisbane ().
Besides all this, a company associated with colourful Sydney business identity, Jim Byrnes has increased its holding in BrisConnections units in this ASX filing to 13% or well over 50 million units.
That gives him a potential liability of more than $100 million.
The company is Brisbane Toll Road Link, and Mr Byrnes, (the Sydney businessman who once advised Alan Bond) emerged last week with 5% of BrisConnections.
That’s calling Macquarie’s bluff.
Here’s what BrisConnections said is the ‘offer’ from Macquarie
BrisConnections Management Company Limited (“BCMCL”) as responsible entity of BrisConnections Investment Trust and BrisConnections Holding Trust (collectively, the BrisConnections Unit Trusts) advises it has received a letter today from Macquarie Capital Advisers Limited regarding a proposal to assist retail unitholders.
The letter advises:
- Macquarie Capital Advisers Limited (“Macquarie”), Deutsche Bank AG (“Deutsche”) and other parties are in active discussions on a proposal to put to retail unitholders in BrisConnections Investment Trust and BrisConnections Holding Trust (“BCS”).
- Under the proposal Macquarie and Deutsche would not require retail BCS unitholders (as at record date of 3 April 2009) to be pursued for the instalment of $1.00 per BCS unit payable to the BCS responsible entity on 29 April 2009, provided that all resolutions to be put to the forthcoming BCS unitholder meeting1 (“Resolutions”) are not passed.
- This would apply only to BCS’s rights against unitholders personally. Units where the call is not paid would still be forfeited in accordance with the BCS constitutions and the underwriting agreement, but no further action would be taken against the retail unitholders.
- Any such proposal would only be available to retail unitholders if all Resolutions are defeated. No proposal has yet been agreed and there can be no assurance that any proposal will be agreed.
- Macquarie proposes unitholders take no action until a further announcement is released in relation to this proposal.
BCS will update the market in relation to the proposal in due course.
