Brisbane-based hedge fund group, Blue Sky, Alternative Investments collapsed on Monday owing more than hundreds of million dollars.
Receivers from KordaMentha were appointed on Monday to Blue Sky on behalf of the major creditor, US investment group, Oaktree Capital Management which holds notes issued by Blue Sky in a funding deal late last year.
Blue Sky Alternative investments reportedly manages $2.8 billion in funds for clients.
At the same time, the directors of Blue Sky appointed representatives from insolvency group Pilot Partners as voluntary administrators to the group.
A separate listed Blue Sky entity, the Blue Sky Alternative Access Fund has not been placed in administration or receivership.
Blue Sky has been under pressure since research reports by independent analysts and short sellers pointed out concerns about how the group valued assets it was managing, including the valuation on tech startups Shoes of Prey and Vinomofo. Shoes of Prey collapsed earlier this year.
“Oaktree have enforced their rights under the convertible note facility entered into by Blue Sky,” following a breach of financial covenants at 31 March.
“The appointment follows a period of significant instability and uncertainty for all stakeholders, including further commentary regarding possible class actions, turnover of senior corporate executives and departure of certain limited partners,” Korda Mentha’s letter to the ASX yesterday stated.
Media reports last night said that Oaktree has requested a repayment of the full $100 million it believes it is entitled to under a lending agreement which was finalised last year.
In September 2018 Blue Sky revealed it had secured a $50 million seven-year senior secured loan note facility from Oaktree.
Media reports said that Blue Sky representatives at the time of receiving the Oaktree’s demand they were shocked given it had only provided the debt, in the form of a convertible note, ten months ago.
The details of the make-whole payment are contained in documents relating to the issuance of the note.
Under the terms of the debt deal, Oaktree had the right to convert its debt into Blue Sky equity capped, at 30% of share capital on issue.
Blue Sky Alternative Assets has no corporate debt apart from the convertible note. In March of last year, it raised $100 million via a placement of new shares at $11.50 a share.
The shares closed 18.5 cents on Friday, down more than 5% on the day. The shares were down 76% year to date to Friday’s close.
The shares are now worthless.
