good news for pif holders, page-12

Packer Firm Skis t o the rescue SMH

May 17, 2008

THE billionaire James Packer has come to the rescue of the debt-stricken former MFS offshoot Living and Leisure Group, which could indirectly increase his private company's hold on Australia's main ski resorts.

In a complex refinancing deal in which the troubled leisure facility operator will aim to pay off $190 million owed to its two main lenders, National Australia Bank and the Octaviar Premium Income Fund, a newly launched Packer private equity vehicle has agreed to pick up part of the debt.

Arctic Capital, a wholly owned arm of Consolidated Press Holdings (CPH), will also underwrite a rights offer to Living and Leisure's beleaguered shareholders, who will be ask to stump up an extra $90 million.

That could mean the Hong Kong-based Arctic becoming a significant investor in the company, which owns and runs the Mount Hotham and Falls Creek ski resorts in Victoria.

CPH, which is Mr Packer's privately held family business, is a 73 per cent shareholder in Australia's largest ski-field operator, Mount Perisher.

However, there are no plans to bring the three resorts together if the refinancing deal goes ahead by the middle of next month. The ski-field interests, an Arctic spokesman said, were an indirect consequence of the deal, though it had helped that CPH knew the snow business intimately.

Arctic yesterday made it clear that its main interest in teaming up with Living and Leisure was the group's plan to expand its popular aquarium operations in Asia, which is the main focus of the new Packer investment vehicle.

At least 30 Chinese cities could support an aquarium but Living and Leisure's expansion is being held back by its debt and Octaviar's current control of the listed company's responsible entity.

Arctic will also take control of the responsible entity under the proposed deal.

The deal is good news for unit holders in the unlisted MFS Premium Income Fund, who have had their distributions and redemptions frozen for the past three months.

In return for shedding its debt, Living and Leisure will pay an upfront $30 million to MFS Premium Income Fund plus an extra $10 million over two years. It will issue a further 88 million shares to the fund.

The deal should also lead to trading resuming in Living and Leisure shares. Its existing investors will be able to take part in the rights issue at 7.5c a share. The securities are currently suspended at 36c each. "It's a transaction that gives us certainty, serious cash and part of the upside in terms [of the shareholding in Living and Leisure]," said the managing director of Wellington Capital, Jenny Hutson.

It is only a week since Ms Hutson's firm signed a deal to buy the management rights of the Premium Income Fund from the stricken Octaviar Limited.

Ms Hutson is a close associate of the Singaporean businessman Chris Scott, who succeeded in a management and board coup at Octaviar. Mr Scott inherited his stake in Octaviar through his sale of the tourism business S8 more than a year ago.