MFS faces Packer challengeNick Nichols 18Mar08 MFS last night...

MFS faces Packer challengeNick Nichols

18Mar08

MFS last night was forced to put out fires on several fronts after facing a push by the Packer-backed Challenger Financial Services to recover $100 million of unsecured notes which mature in 2011.

The embattled Gold Coast financial services company has also been refused an extension for lodgment of its December-half results, while the Queensland Public Trustee has issued legal proceedings to have the company reveal its true financial position.

But on a positive note, MFS said it had progressed plans to sell the Sheraton Mirage Port Douglas, with the likely frontrunner understood to be an entity associated with its joint-venture partner in the property, the Ray Group.

Challenger has issued a please-explain to MFS regarding the unsecured notes, alleging MFS had breached a subscription agreement relating to their issue.

The breach is understood to involve an interpretation of a change in circumstances following MFS's sale of 65 per cent of its Stella tourism business to private equity group CVC Asia Pacific.

"MFS has endeavoured to resolve disagreements in relation to the terms of the notes through negotiation with Challenger during recent weeks," said the company in an update to the Australian stock exchange last night.

"MFS strongly denies there has been any breach and will resist the claim vigorously."

The action, if successful, could force MFS to repay the notes earlier than the November, 2011, maturity date.

However, one analyst observed the move could be doomed because the notes were unsecured.

MFS also said last night it had co-operated fully with the Queensland Public Trustee in regard to its financial position.

The company said it had 'consistently stated that it is willing to provide the trustee with all reasonable information requested'.

"MFS will comply with the court's timetable for the production of documents and information to the trustee over the next two weeks," it said.

The company has also bowed to pressure by the corporate watchdog ASIC to release its interim result, saying last night it would be announced 'as soon as practicable'.

Meanwhile, the sale of the Sheraton Mirage Port Douglas appears to be on track, with Aurelius Investment Group named by a weekend media report as the likely buyer.

Aurelius is associated with Mark Jarved, who is brother-in-law to Ray Group head Tom Ray.

MFS did not name the interested party last night, only confirming that it had 'entered into exclusive negotiations for the sale of a number of Port Douglas assets'.

They included the Sheraton Mirage Resort, Mirage Country Club and golf course, two development sites and the Balé resort.

"MFS has been engaged in discussions with several interested parties since it commenced an international sales campaign for the assets in September," it said.

MFS owns the properties through the Blue Sky Development Trust. It said there was 'no guarantee that any binding sale agreements will eventuate from the current negotiations'.

http://www.goldcoast.com.au/article/2008/03/18/8984_gold-coast-business.html