The BrisConnections situation grows messier with more legal drama with a potential proxy voting mess that could see more controversy, a major court decision that could create more confusion and reports of last minute efforts to conjure a deal.
A Supreme Court judge in Brisbane this morning could sink, or approve the controversial meeting of BrisConnections unithholders due to start at 10 am.
The judge of the Queensland Supreme Court will decide at 9 am if a vote to wind up BrisConnections can go ahead at the meeting.
Media reports tell of feverish negotiations over the weekend to try and produce an outcome that will not see today’s meeting either held, or degenerate into a debacle with a real chance of a vote in favour of winding up emerging.
Negotiations between the co-underwriters of the failed BrisConnections float, Macquarie Group and Deutsche Bank, ended over the weekend.
Macquarie Group shares have recovered in recent weeks, as the outlook for banks has seemingly improved. BrisConnections problems could damage the banmking group once again.
Both Macquarie and Deutsche say they will wait for the result of a shareholder vote before agreeing to any deal. That means they are also waiting for the Supreme Court decision.
Macquarie Group has been attempting for 10 days now to try and find a solution (which would be preferable to a court win by them which would spark more legal action).
It has been suggested it is developing some way of allowing investors who don’t want to pay the $1 second installment due later this month, to leave the company without loss.
A similar idea was suggested last week, but was sunk when co-underwriter, Deutsche Bank didn’t support it.
Whatever the vote – and it is unlikely to reach the 75% required to wind up the company – BrisConnections will be wounded, along with the reputations of all those who participated in its creation.
But angry unitholders may muster enough support – 50% – to reinstate the dividend and to overthrow the board, decisions that would ensure the chaos continues.
A further complication involving this morning’s meeting is that the only posted proxies that will be counted are the ones posted by unitholders before 6 pm in capital cities on last Wednesday.
It seems this has happened because the deadline for lodging proxies by post, was 10 am Sydney time Friday, but the forms were not sent out until last Tuesday and did not arrive in letterboxes until Wednesday.
That means investors had just half a working day to fill out the form and post it. Failing that, their only option is to fax the proxy form and not every one has a fax.
There is no online voting, so a potential mess could happen and that could in turn trigger another legal challenge entirely separate to the one we will hear about today.
If those seeking the winding up succeed at today’s meeting (assuming the judgment this morning gives the meeting the go-ahead), then the opponents (Macquarie, the company, its shareholders in the form of Leighton Holdings etc and the Queensland Government) might bring legal action.
If Macquarie and its allies win, those seeking the winding up could launch legal action of their own.
Macquarie Group argued the vote should not go ahead in the Queensland Supreme Court hearing last week.
Macquarie is a key organiser and funder of the $4.9 billion BrisConnections, project which is building the country’s largest infrastructure project in Brisbane.
Today’s meeting was called by major unitholder, Australian Style Investments (ASI), owned by 27-year-old Melbourne entrepreneur Nicholas Bolton.
He is pushing to wind up the company and delay the April 29 deadline by which unitholders must pay the second $1 installment for each unit owned.
Many retail unitholders, particularly those who bought the stapled shares for as little as 0.1c, will not be able to pay the installment.
The judge, Justice Dutney said on Thursday afternoon that he would deliver his judgment at 9 am on today.
Australian Style Investments was supported by Macquarie’s co-underwriter Deutsche Bank, which argued the meeting should continue to allow unitholders to make up their own minds.
Macquarie and Deutsche are on the hook for $390 million each for the second and third installments, should unitholders not pay. They are liable fort the payment if legal action against unitholders to force payment is unsuccessful.
Such legal action against every non-paying unitholder is considered to be unlikely simply because of he cost involved.
Should unitholders declare bankruptcy that would put Macquarie and Deutsche on the hook.
There is now a clear split between Macquarie and Deutsche.
The Australian Securities & Investments Commission told the court it was concerned Macquarie’s application impinged on members’ statutory rights. In another hearing it criticised disclosure levels by BrisConnections in the past.
The role of colourful Sydney identity Jim Byrnes, who has around 13% of the units, is also to be watched today. He could be a wildcard.
