774 abc melbourne radio, page-8

Hi all,

The company was Tricom. The following is lifted from tomorrow's Age newspaper in Melbourne...

Tricom debts cover in doubt

THE solvency of broking house Tricom is in question after it was unable to cover the cost of yesterday's trades, halting settlement on the Australian Securities Exchange for more than four hours.

It is believed the margin loan specialist took heavy losses in trade on Tuesday last week, when the worst sharemarket fall in 18 years brought a record number of margin calls.

A spokesman for the exchange said settlement — the moment when money changes hands for the trades that have been agreed to — was scheduled for 12.30pm every day. Tricom's inability to cover its trades meant settlement was not until 4.42pm.

"Sufficient funds were not available for this participant to settle at the required time to meet the scheduled settlement arrangements," the spokesman said. "Settlement then was recalculated and completed at 4.42pm, and it excluded the transactions at issue. That was done to try and reduce as much as possible the impact on the rest of the market."

The spokesman would not confirm Tricom as the participant at issue, but Tricom's managing director Lance Rosenberg last night told BusinessDay in an email that administrative issues springing from an exceptionally large volume last week had caused its problems.

Mr Rosenberg said Tricom was confident the problem would be resolved by today.

A spokeswoman was asked to comment on rumours that about 60% of Tricom's client base had received margin calls in Tuesday's falls. A margin call is when an investor has borrowed money to invest, but the value of the investment has fallen so far the lender demands more money to cover the losses.

BusinessDay contacted Tricom a week ago to query this, but received no response. Mr Rosenberg declined to answer the question in last night's email.

A spokeswoman for the Australian Securities and Investments Commission said it had no comment.

It is believed Tricom owed about $110 million when settlement was scheduled. The trades ought to have been covered by a $170 million facility from ANZ, but Tricom was unable to access it.

According to documents lodged with ASIC, Tricom's creditors include ANZ, Commonwealth Bank and Westpac along with investment banks Morgan Stanley, Merrill Lynch and Babcock & Brown, and fund managers BT Securities, Aspen Capital Partners and, as of June, Allco Principals Investments. Many of the charges relate to margin lending facilities.

Tricom was one of two margin lenders that forced Allco Principals Investments and Allco Principals Trust to sell 22.1 million shares in Allco Finance Group on Wednesday last week, causing AFG shares to fall more than 26% in that day's trade.

Tricom's most recent financial statements, lodged with ASIC in September, show total bank loans and overdrafts grew from $926 million in the year to June 30, 2006, to $2.38 billion a year later.