Beleaguered MFS forced to sell key investmentsScott...

Beleaguered MFS forced to sell key investments

Scott Rochfort
SMH
January 26, 2008

THE noose has continued to tighten around MFS, after the stricken Gold Coast property group confirmed its exit from three of its key listed investments at bargain-basement prices.

MFS, whose shares remain suspended from trading after their 69 per cent slump last Friday, has further worried shareholders by confirming one of the sales stemmed from a margin call by a lender.

Only a week after the former chief executive, Michael King, denied MFS had any short-term debt problems, the group yesterday confirmed it had sold down its stakes in the property developer MFS Diversified Trust and the retirement home fund Babcock & Brown Communities (BBC).

It confirmed the sale of an 8.6 per cent, or $37 million, stake in the hedge fund HFA Holdings was the result of a margin call.

In a sign of MFS's frantic attempts to repay a $150 million short-term loan to the US financier Fortress Investment Group that was due to expire in March, the company also sold shares which were under escrow in BBC.

This has only fuelled expectations MFS could be forced to sell part of its Stella leisure business at a fire-sale price in a bid to raise quick cash to appease lenders.

The short and dramatic fall of MFS, which was savaged last week over its plans to raise $550 million, has been further illustrated by its spin-off, MFS Diversified, dissociating itself from the company.

"MFS has its own issues. I am not at all surprised that they sold," said MFS Diversified's managing director, Guy Farrands.

Mr Farrands said he was also looking to change the name of his fund, which owns the Queensland property developer Villa World.

"We just want to make sure we don't change it to the same thing," he said, referring to MFS's plans also to change its name.

MFS confirmed it had sold 7 million shares in MFS Diversified for 55c each - more than 40 per cent less than they were worth only two months ago.

Two of the company's funds - MFS Treasury and MFS Investment Nominees - sold their 23 million shares in Babcock & Brown Communities at 55c, half their value three months ago.

Despite being under "voluntary" escrow until February 10, Babcock & Brown agreed to release the shares.

â– Allco Finance Group shares rose 54c to $3.40, as panic over the David Coe-led company's debts subsided. But after the close of trade Allco Finance announced the resignation of the non-executive director Barbara Ward in a sign the turmoil of the past week has taken its toll on the company's board. Ms Ward, who sits on the Lion Nathan board, offered no reason for her resignation.

Shares in Allco Finance hit a low of $1.70 on Wednesday, after a fund largely owned by Mr Coe and some senior Allco staff was forced to sell large stakes in Allco Finance and Allco HIT after receiving margin calls. The fund - Allco Principals Investments - was the largest single shareholders in both of the listed funds.

Shares in Allco Securities and Mortgage Trust surged 20c to 40c after the listed vehicle said the earliest repayment of its medium-term debt was not due until November 2009.



looks like the selling at half price might be a sign for Stella as well....get those Open tickets real quick!