At present, we have the intriguing scenario that if the forecast value of BCSCB after instalment 2 is below zero (ie the same $0.001 with no buyers), which is the opinion of some commentators on the Rivercity precedent, then might current holders arguably be better off defaulting and being chased for "just" $1/share rather than immediately losing $1/share and being up for yet another $1 in January 10 with no way out? If/when the inevitable mass default and consequent recovery action goes to court, I suspect much of the shareholder class defence will rest on the argument of an allegedly misleading PDS which could be seen to an average unsophisticated investor as implying that the pre-opening distributions were funded as interest on moneys pre-paid by shareholders and held on account by BCS to fund ongoing construction. It could be argued that Rowe also repeatedly used these imminent distributions to encourage the continued holding or acquisition of partly paid shares by retail investors after float (see interview with Alan Kohler)only to shortly afterwards torpedo the marketability of shares by effectively cancelling all such distributions which has formed a cornerstone of the original investment proposition. Sure, plenty of companies have used instalment payments and spruiked the attraction on the basis of yield (e.g.Telstra3) but they have stuck to their promises.IMO BCS have brought the current situation upon themselves by moving (or more accurately,removing) the goalposts of their obligations under the PDS whilst expecting shareholders to remain with theirs. This was not some "sophisticated & wholesale investor only" scheme but was arguably put across in the PDS as a vanilla, asset based, financially secure, respectable institution backed project aimed fairly & squarely at retail Mum&Dad investors. Michael West in the SMH has also highlighted some possibly dodgy forecasting on the traffic figures. Add this to the sell off by the original promoting institutions after fees had been paid (if they were worried about prospects, surely they should have pulled the float?) and the extraordinary coincidence of non-notification of large sales by other huge owners(eg Pictet),and I think I can see why BCS & GSJBW are having second thoughts as to whether any recovery action will turn into a farce. For Macquarie to be left to pick up the pieces of their own financial engineering would aguably be justice indeed. Last but not least, I hear a whisper that the first year Directors' shares to be issued in June will be applied as if on a fully paid basis -if so, a neat way of leaving themselves out of the trap buying large quantities of valueless pp's with huge further liability. Perhaps they foresaw the possible pitfalls of the instalment system! Not meantioned in the PDS your honour?. Ho hum!
BCS Price at posting:
0.0¢ Sentiment: Sell Disclosure: Not Held
