BCS - BrisConnections Unit Trusts

[skyQuake]

Re: Brisconnections shareholders - financial ruin

I do agree with that - but we must consider the potential ramifications here. An individual can make a rather simple mistake here - a mistake with a mere $500, and wind up with 1 million dollars in liabilities! An 18 year old, fresh out of high school might buy a few hundred worth of these stocks in a drunken haste, in the spirit of a roulette spin - and wind up potentially losing everything they have! That's just insane.

Agree with that, ASX is opening up a can of worms here.

The problem is that you can buy these stapled securities just like a normal share; They have been compared to installment warrants which actually REQUIRES you to sign a disclosure statement before your broker allows you to trade them - (cause you might lose all your money in the warrant (gosh!).

T3: TLSCA was the same boat but there was no chance that was gonna go to 0 so nobody cared about rights and obligations...

Commsec had some good info about it:
http://www.comsec.com.au/public/news.aspx?id=1023

 

[aleckara]

Re: Brisconnections shareholders - financial ruin

I believe with normal share trading the rule should be simple:

Maximum loss = What you put in. The whole reason why shares are not as risky as many other classes is that your losses are capped to the money you put in. This is the level that normal investors understand.

It's a toll road, its got to be undervalued at its price. Why isn't anyone buying? Even if it is going bust it's only a measly $500 investment. Good odds. Therefore they buy.

The thing is if these securities were traded as warrants I doubt they would raise nearly as much money hence why they are the way they are.

 

[barney]

Re: Brisconnections shareholders - financial ruin

If you do protect yourself via a transfer, make sure that it is the shares that are transferred to a separate entity. Definitely NOT the other way, where you transfer your other assets away from yourself. Because if you still own the shares, BrisConnection will still have a claim on you personally. You will have to pay them back over the next 50 years or whatever... so you need to not just your consider your current assets (however little there are), but your future cashflow / assets as well.

Good advice


(Sorry this second quote didn't paste correctly)

Appreciate your points SKC, and I realise that at this point in time I am putting forward an unrealistic argument, but I see some inherent problems in our "free market" system when .............

1) On 99.9% of ocassions a shareholder selling and losing his shirt because a Co. is crap is an unfortunate part of how the market operates (no arguments from me there .... I've been down that road) .......... BUT .....

2) A shareholder losing his life savings (X3) because he is UNABLE to sell his shares in the same crap Company due to market inefficiency ...... AND (this is my main gripe) The Company is the one who is going to sue the shareholder for breach of contract .............

Just doesn't smell right to me ...... :flush:

Anyway, I don't own any of these shares .... I just feel sorry for those in this situation .......

I'm still curious on MACBanks timing of liquidating their position/exposure just prior to the SP collapse .................... That doesn't smell too good either !!


PS Thanks for the info on Warrants C/fish .....

 

[drsmith]

Re: Brisconnections shareholders - financial ruin

It's a toll road, its got to be undervalued at its price. Why isn't anyone buying? Even if it is going bust it's only a measly $500 investment. Good odds. Therefore they buy.

Because in terms of their $3 fully paid price no one currently values them $2 or more.

If (like TLSCA) the majority of the fully paid share price was covered by the the first instalment (say, $2 for example) then there still might have been a market for these securities even in the current depressed market.

One way to get the instalment receipts trading again would be to allow them to trade at a negative value relative to the the instalment price until they are fully paid. If, for example the market values the $3 fully paid equivalent at $1.50, the $1 instalment receipts would then trade at $-0.50. In practice this would mean that the purchaser would get $0.50 from the seller per instalment receipt. This would then be retained by the stockbroker in the purchaser's account to go towards payment of the next instalment (for obvious reasons). This might be too difficult to do in practice however.

 

[jet328]

Re: Brisconnections shareholders - financial ruin

I'd go see your accountant tomorrow. Leave the action groups/regulators to last, its too risky & you may get no where.

I'm sure if you speak to your accountant you could do something like
-create a company, perform an off-market transfer to that company & then Macquarie can come after that new company
or if you created a SMSF and transferred them, then isn't a super fund non-recourse?
Both my suggestions are probably wrong, but I'm sure you can do something similar that will protect your other assets

 

[korrupt_1]

Re: Brisconnections shareholders - financial ruin

One way to get the instalment receipts trading again would be to allow them to trade at a negative value

is that even at all possible? does that mean you will be PAID to own shares/receipts in that company? bizzare concept....

 

[doctorj]

Re: Brisconnections shareholders - financial ruin

I can understand how someone who subscribed to the placement and still holds the stock at an installment date is liable. They purchased the stock having atleast been issued the PDS and therefore agreeing all the terms of the placement.

But I can't understand how those that bought them on market later on could possibly be liable. How can they be bound by terms not presented to them during the transaction? They obviously weren't party to the initial contract during the placement and they clearly wouldn't have been presented with this material and significant terms when buying them. Surely there's a strong arguement using basic contract law that there should be no recourse for people who bought these on-market? Which then raises the question, should these securities even be listed? Sounds much more suited to being an OTC product to me.

 

[Prospector]

Re: Brisconnections shareholders - financial ruin

I'd go see your accountant tomorrow.
I'm sure if you speak to your accountant you could do something like
-create a company, perform an off-market transfer to that company & then Macquarie can come after that new company

The company would need to be a PTY LTD which might cost around $800, but peanuts compared with any other scenario. For what it's worth Jet, hubby made exactly the same suggestion as you! :

It might stop you being a company director for a few years, but hopefully that wont matter to you.

DoctorJ, totally agree with your logic. These warrants should never have been available for sale without the PDS - and you have to acknowledge online that you have read it - crikeys, several share forums have a similar disclaimer just to enter - if they need it, why doesnt the ASX!

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

Hi Rocket,

I'm sorry to hear of your situation. I've been following this mess for a few weeks now. I do think there will be a way out for you using an off-market transfer. But please get some professional advice before acting on any of these suggestions.

If you are not familiar with off market transfers, you fill out a form to transfer the shares to a new owner. All you need is the SRN and the signatures of the original owner and new owner. Here is a sample form: link

Some suggestions for how to use this way to offload your Brisconnections shares are as follows:

1. Donate them to charity. Lots of charities have an off-market transfer form online that lets you transfer shares to a charity. Google it and see. As the transfer does need someone at the charity to sign the form and send it on it might not work 100% of the time. But if you systematically tried every charity you could find I'm sure you'd get someone agree to take on your 'donation' without realising the implications.

2. Donate them to a homeless person. Find a homeless person in your nearest large city and offer them a fist full of cash to sign your form. The homeless person benefits from getting your cash and have nothing to fear from the company debt collectors - because they have nothing to lose.

3. Go on an overseas trip to a poor country and offer a poor local a fist full of cash to sign the form. This is very similar to the above option.

4. Donate them to a person who doesn't exist. Make up a name and get a mate to sign for them. There is a precident where someone has transferred shares to their pet budgie, but it is probably illegal. link

I saw this comment from a brisconnections shareholder who did get professional advice. His comment was in reply to the suggestion for transferring the shares to a homeless person: link

I got out of this with a stack of shares (many millions) in the most recent and last big day of trading. I was going to go down the path of the homeless person and I do think it would work. Close to homeless people live in boarding houses and do have an address. Beauty of these houses is that there are plenty to talk to about this and I do think it would work for as little as $5K. Prior to selling and thinking I was a goner I spoke with a bankruptcy firm in Sydney who assured me it would be very easy for them to transfer the shares ($10K cost to transferee plus probably $10K firm costs) to a company about to go down the bankruptcy path. They would then go into liquidation prior to settlement and all clean. I also got legal advice on this and it was optimistic that the bankruptcy administrator would not "set this aside". This is all I'll say on the issue but you can get out of this with a bit of rat cunning!!!!!! Good luck and I feel for all those stuck!!

I've been looking at the market depth for BCS every day for weeks. Every day there would be a few extra sellers and more shares for sale. But yesterday there was a drop in the number of sellers and an almost 15% drop in the number of shares listed for sale. I'm guessing that a lot of those 15 million shares which are no longer for sale have been disposed of by off-market transfers. The only way Fang He could have sold her 32.5 million shares was through an off-market transfer.

I hope you manage to get out. I think you should be able to with an off-market transfer. Good luck!

 

[James Austin]

Re: Brisconnections shareholders - financial ruin

Hi Rocket,

Some suggestions for how to use this way to offload your Brisconnections shares are as follows:

1. Donate them to charity. Lots of charities have an off-market transfer form online that lets you transfer shares to a charity. Google it and see. As the transfer does need someone at the charity to sign the form and send it on it might not work 100% of the time. But if you systematically tried every charity you could find I'm sure you'd get someone agree to take on your 'donation' without realising the implications.

2. Donate them to a homeless person. Find a homeless person in your nearest large city and offer them a fist full of cash to sign your form. The homeless person benefits from getting your cash and have nothing to fear from the company debt collectors - because they have nothing to lose.

3. Go on an overseas trip to a poor country and offer a poor local a fist full of cash to sign the form. This is very similar to the above option.

4. Donate them to a person who doesn't exist. Make up a name and get a mate to sign for them. There is a precident where someone has transferred shares to their pet budgie, but it is probably illegal. link

i like your style enzyme, but a little unscrupulous, particularly no#1.

but no#4 sounds good. i'm not fond of the neighbors guinne pig which now inhabits our shed. will he need to sign the document, or merely sight it?

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

'unscrupulous' is being kind. Thanks.

Yes, your neighbors guinne pig would need to sign, or someone sign for him.

 

[rocket12]

Re: Brisconnections shareholders - financial ruin

Hi Rocket,

I'm sorry to hear of your situation. I've been following this mess for a few weeks now. I do think there will be a way out for you using an off-market transfer. But please get some professional advice before acting on any of these suggestions.

If you are not familiar with off market transfers, you fill out a form to transfer the shares to a new owner. All you need is the SRN and the signatures of the original owner and new owner. Here is a sample form: link

Some suggestions for how to use this way to offload your Brisconnections shares are as follows:

1. Donate them to charity. Lots of charities have an off-market transfer form online that lets you transfer shares to a charity. Google it and see. As the transfer does need someone at the charity to sign the form and send it on it might not work 100% of the time. But if you systematically tried every charity you could find I'm sure you'd get someone agree to take on your 'donation' without realising the implications.

2. Donate them to a homeless person. Find a homeless person in your nearest large city and offer them a fist full of cash to sign your form. The homeless person benefits from getting your cash and have nothing to fear from the company debt collectors - because they have nothing to lose.

3. Go on an overseas trip to a poor country and offer a poor local a fist full of cash to sign the form. This is very similar to the above option.

4. Donate them to a person who doesn't exist. Make up a name and get a mate to sign for them. There is a precident where someone has transferred shares to their pet budgie, but it is probably illegal. link

I saw this comment from a brisconnections shareholder who did get professional advice. His comment was in reply to the suggestion for transferring the shares to a homeless person: link



I've been looking at the market depth for BCS every day for weeks. Every day there would be a few extra sellers and more shares for sale. But yesterday there was a drop in the number of sellers and an almost 15% drop in the number of shares listed for sale. I'm guessing that a lot of those 15 million shares which are no longer for sale have been disposed of by off-market transfers. The only way Fang He could have sold her 32.5 million shares was through an off-market transfer.

I hope you manage to get out. I think you should be able to with an off-market transfer. Good luck!

Thanks for all the advice, my accountant is getting back to me with what he thinks is the best way of doing this.

Regarding the depth, it is dropping daily now because by default your sell bid only stays in the system for 20 days, so the sell bids daily are dropping off, and some people maybe dont know this and are not putting in their sell bid again. I know I have around 15 million shares ahead of me in the queue, and on the 16th of this month my sell bid will drop off and I will be striaight into commsec with my sell bid that morning back at the end of the queue. This has only now started happening in bulk because it was around 20 trading days ago that we all piled on trying to sell.

Fang He sold her shares to Nicholas Bolton from Style investments in Melbourne in an online trade. Interestingly he is now the major shareholder, and he hasn't put them up for sale. Brisconnections cant get hold of him, so nobody knows what he is planning to do....Me thinks hes up to someting...

 

[James Austin]

Re: Brisconnections shareholders - financial ruin

'unscrupulous' is being kind. Thanks.

Yes, your neighbors guinne pig would need to sign, or someone sign for him.

what would legally constitute the guinne pigs consent, if i were to sign on his behalf?

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

Hmm. well, err, I'm not sure.

A quick google gives more detail on how the shares were transferred to the budgie here, but then the share registry found out and reversed the transfer here - so the shares reverted to the original owner.

So maybe that isn't the way to go.

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

Thanks for all the advice, my accountant is getting back to me with what he thinks is the best way of doing this.

Regarding the depth, it is dropping daily now because by default your sell bid only stays in the system for 20 days, so the sell bids daily are dropping off, and some people maybe dont know this and are not putting in their sell bid again. I know I have around 15 million shares ahead of me in the queue, and on the 16th of this month my sell bid will drop off and I will be striaight into commsec with my sell bid that morning back at the end of the queue. This has only now started happening in bulk because it was around 20 trading days ago that we all piled on trying to sell.

Fang He sold her shares to Nicholas Bolton from Style investments in Melbourne in an online trade. Interestingly he is now the major shareholder, and he hasn't put them up for sale. Brisconnections cant get hold of him, so nobody knows what he is planning to do....Me thinks hes up to someting...

Are you sure?

I thought those trades were unrelated and took place on different days. If you look at the BCSCA ASX announcements, Fang He sold her shares in two batches. A small one on 5 November and 30 million+ on 13 November (link). Nick Bolton brought his on 24 November (link).

I do wonder what he is going to do.

 

[freddy2]

Re: Brisconnections shareholders - financial ruin

It appears to me (not a lawyer or accountant) that the "seller" does not have an obligation to make sure the "buyer" has the ability to make the future payments as many would not have been able to buy through Commsec in the first place.

It looks like Macquarie bank were too smart by half with the financial engineering of this deal.

 

[rocket12]

Re: Brisconnections shareholders - financial ruin

Are you sure?

I thought those trades were unrelated and took place on different days. If you look at the BCSCA ASX announcements, Fang He sold her shares in two batches. A small one on 5 November and 30 million+ on 13 November (link). Nick Bolton brought his on 24 November (link).

I do wonder what he is going to do.

Yeah not too sure, I just thought I read that in an article. But it would be good to know if she sold them on or off the market!!

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

I thought she sold them off-market, for a couple of reasons.

Mainly because Brisconnections still doesn't know who brought her shares. They knew 'Australian Style Investments' had brought in on the day it happened because that was on market. But weeks later they still don't know who brought Fang He's shares. From this link:

Fang He, the Melbourne housewife who bought 8% of the company ”” with a potential $65 million debt to the company ”” has sold her shares. BrisConnections is desperate for her to file a substantial shareholder notice to discover who now owns the shares

It is now over a month since she sold her shares and the company still has not given a notice as to who owns her 8% of the company. I assume that has to be because it was an off market transfer.

The other reason I figure she did it off market is that there were no on-market buyers. Except for Mr Bolton, but he came in a week after she had 'sold'.

 

[drsmith]

Re: Brisconnections shareholders - financial ruin

is that even at all possible? does that mean you will be PAID to own shares/receipts in that company? bizzare concept....

I doubt it would be possible but to me it's the only way the market can value the instalment receipts.

It would not be free money either as the purchaser will have still aquired the liability associated with future instalment payments.

 

[cuttlefish]

Re: Brisconnections shareholders - financial ruin

Given that the majority of these shareholders probably purchased in the 0.001 to 0.002 sort of range, its unlikely that any of them will come close to meeting the liability which is 1000 times their purchase cost.

If BCS even got back $.05 to the $1 via pursuing these shareholders through debt collectors etc. they'd probably be doing extremely well. (that would mean that for every single $500 parcel bought at .001 they managed to go after the holder and get back $25,000 - to me that would be an extraordinarily good recovery rate - most peoples banks have first dibs on any assets they hold via property mortgages so BCS will be second in line behind anyone that has genuine hard assets, and a lot of the holders will be young people that haven't got more than $10 or $20k in recoverable assets anyway.


If we assume that somebody out there actually believes that the company is worth something, what they could do is find someone that is willing to buy the lot for say 20c for all three instalments. (i.e. get the fully paid up units for 20c). If they put it out to a book build process they might even get a lot more - they might get 80c or even $1.50 - who knows - at one stage people seemed to think they were worth $3.00. They could work with Macquarie to do this, do the book build, buy out the minor shareholders that want to sell, sell the whole lump to the corporate buyer.

Macquarie would still have to stump up for the difference as per the underwriting agreement, but at least they would have to stump up far less, and BCS would not have the PR nightmare and massive headache of having to pursue hundreds (thousands?) of shareholders through the bankruptcy courts.

And if they can't find a buyer to purchase fully paid up units at 20c a pop then the company should possibly face the facts that in the current market nobody is prepared to back the project properly and consider other more radical solutions.


I guess the only flaw in the solution above is that Macquarie gets any defaulted units now if the holder defaults on the installment so under the scenario I describe they'd expect to still get units for meeting the shortfall as per the underwriting agreement.

Still its not hard to see that if BCS is pro-active they could come up with a solution that still recovers some funds from the small shareholders without having the do the bankruptcy approach. e.g. they could do a 'negative priced' buyback. BCS will take back units if the holder pays them $0.1 per unit. (hows that - a reverse float - pay us money to give us our shares back ...).

I still find the whole situation really quite bizzarre.