July 25, 2008 10:47am Octaviar spared the axe 25 July 2008
OCTAVIAR has avoided liquidation at after a new trustee agreed to assume oversight of the embattled group formerly known as MFS.
A Brisbane court heard yesterday that listed Trust Company would now act as trustee of the Gold Coast firm if a meeting of creditors owed more than $1 billion supported an Octaviar plan to pay back just a fraction of that amount.
Sydney-based Trust is one of the nation's oldest and biggest financial management companies. The company had first flagged interest in taking over after the PTQ sought to resign last year.
Octaviar executive director Chris Scott hailed the apparent collapse of the PTQ's legal challenge yesterday as "a win for everybody''.
"Common sense has prevailed. Now we can sit down and talk to everybody and fully explain the proposal to everybody without this hanging over our head,'' Mr Scott said.
Seven creditors, including Challenger Management Investments, Fortress Capital and Wellington Capital, joined Octaviar in calling for an adjournment of the case until September 9. The Australian Taxation Office had supported a wind-up but later agreed to the adjournment, which was approved by Justice Richard Chesterman.
Most creditors believe a settlement offer put forward last week by Octaviar will provide better returns than any money squeezed out through a costly liquidation process that could take three to five years.
Mr Scott said that creditors would receive just 13.9 in the dollar under a wind-up scenario.
The PTQ filed suit in the Supreme Court in early June to appoint a liquidator over $351 million owed to 560 listed noteholders and raised fears about possibly improper disposal of assets.
Solicitor-General Walter Sofronoff, QC, acting for the PTQ, told the court that his client still believed that Octaviar was insolvent and supported a scheme of arrangement under court supervision. The PTQ also wanted undertakings to preserve assets, a key reason for moving forward yesterday's hearing from September 9, he said.
Acting Public Trustee Patrick Wedge said later he had "no power to object to the appointment'' of another trustee.
Mr Scott said last week that Octaviar had set aside $130 million to pay back creditors owed $560 million, with another $400 million to be sourced from asset sales over the next three years.
About 200 of the noteholders at the heart of the PTQ case would receive full payment of money owing if they accepted the deal by August 11.
Brisbane merchant banker Jenny Hutson, whose firm Wellington Capital is the responsible entity of the former MFS Premium Income Fund, said yesterday she was ready to accept $47.8 million of the $197.5 million owed to her 10,385 clients. Liquidation would deliver only half the payout, she said.
"This is about economic rationality. It's a clever solution to a complex problem,'' Ms Hutson said.
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