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MFS offshoot says it may go broke soonShannon Willoughby

04Apr08

LIVING and Leisure Australia has admitted it may soon go broke.

In its half-yearly report, released late yesterday, the Gold Coast company and its auditor say they are concerned over Living and Leisure's ability to pay a $185 million debt.

PricewaterhouseCoopers said that even if the company sold all its assets, it may not be enough to pay its debt, which is due on June 30.

It is the first of the troubled MFS empire to admit it may not be able to continue operating as a going concern.

"The directors have concluded that there are reasonable grounds to believe (we) will continue to satisfy the senior secured lender and the unsecured lender, for at least the short term," said Living and Leisure in a report to the Australian Securities Exchange.

"However, there is significant uncertainty surrounding the ability of the group to successfully complete the negotiations and continue to satisfy the senior secured lender and the unsecured lender and ... there is significant uncertainty as to whether the group will continue as a going concern," it said.

The company has posted an $11.9 million loss compared with its $13.75 million profit the previous year.

Late last year, it was informed it had breached covenants with a senior secured lender; it owes $112.5 million to this lender.

It also owes $57 million to a related party, believed to be a fund linked to the embattled Octaviar (formerly MFS Limited).

Living and Leisure is desperately seeking buyers of its assets, including its aquarium business, ski fields, tree top walks and a development in Melbourne.

The group said it was looking at recapitalising, refinancing or selling assets.

It said if it sold its Oceanis Group, one of the world's largest aquarium owner and operators, which included the Melbourne Aquarium, it would experience a 'significant loss.... in the range of $30 to $40 million.'

It paid $150 million for the Melbourne group just over two years ago.

Last month, it tried to sell it to Village Roadshow for $200 million, but the deal never eventuated.

Company secretary Jullanne Shearer said the group was in 'advanced negotiations' with several parties about the sale of assets.

It also said no distributions would be paid to shareholders for the six month period, ending December.

In the six months, the group produced a revenue of $80.2 million. Its losses were attributed to an impaired write down of $15.7 million and expenses incurred from the failed takeover of Tourism Holdings Limited, costing $8.8 million.

Earlier this week, Living and Leisure acting chief executive John Schryver said the group's immediate focus was to cut debt.

"It is a very tight market at the moment but we have to pursue every option," he said.

"We are looking at recapitalising, refinancing or selling assets and we are showing equal vigour to all options."

Also this week, Living and Leisure Australia changed its name from MFS Living and Leisure to distance itself from parent company, Octaviar, which also recently changed its name.

Former related company GEO Property Group also changed its name from MFS Diversified.

Living and Leisure stocks were suspended in tandem with Octaviar on January 18.

They remain frozen at 36c.