BCS - BrisConnections Unit Trusts

Macquack · 5 January 2009

Re: Brisconnections shareholders - financial ruin

From the Brisdisconnections website
What if I don’t pay the instalments?
If you are liable for an instalment on stapled securities and do not pay the instalment, BrisConnections can take action to recover the amounts owing.
If you still fail to comply with your payment obligations, voting and distribution rights relating to those stapled securities will be suspended. BrisConnections can also sell your stapled securities and apply the sale proceeds to pay the amounts outstanding in respect of those stapled securities, which will include the unpaid instalment amount plus any applicable interest (calculated from the instalment payment date) and the costs and expenses of enforcement and sale. The balance (if any) will be paid to you.
If the sale proceeds are not sufficient to cover the amount outstanding, BrisConnections can pursue you personally for the balance. This may include the commencement of legal action against defaulting unitholders.
The payment of the instalments has been fully underwritten by Macquarie Capital Advisers and Deutsche Bank (except for the second and final instalments in relation to partly paid stapled securities issued under the Distribution Reinvestment Plan). To the extent unitholders default on payment of the instalments, Macquarie Capital Advisers and Deutsche Bank can either acquire the stapled securities which are to be sold by BrisConnections, or subscribe for such number of those stapled securities which BrisConnections cancels.
You should be aware, however, that the fact that instalments have been underwritten will not affect your liability to pay instalments, nor will it guarantee a residual amount to those who have defaulted on their payment obligations.

Did those goons from the house of greed (Macquarie) sell all their shares knowing full well they would get them back for nothing when the shares are forfeited.

thermalmonster · 5 January 2009

Re: Brisconnections shareholders - financial ruin

I would say so

Julia · 5 January 2009

Re: Brisconnections shareholders - financial ruin

A few days ago I posted an email I'd sent to Brisconnections asking if it was possible to just forfeit the shares. I was doubtful there would be a reply.
Today the following response was received:

Thank you for your email of 2 January,2009. The email has been passed onto me via our Airport Link enquiries email address.

Whilst we acknowledge your situation unfortunately, at this time a buy-back or other cancellation of the liability to pay the instalments is not possible and still preserve the integrity of the project structure. However, we are considering whether there are options available which will preserve the integrity and still honour our commitments.

Airport Link is, we believe, a vital piece of infrastructure for South East Queensland. It will prove to be invaluable in terms of providing access between the Brisbane CBD, the Northern Suburbs the Brisbane Airport, and the Trade Coast; Brisbane CBD and the airport/trade coast precinct being two major economic centres in South East Queensland. In addition, Airport Link project will reduce the necessity of 18 sets of traffic lights and reduce travel time in the order of 50%.

We make the following comments:

1. The instalment structure of BrisConnections’ stapled securities was disclosed in the PDS document last July 2008, is described on the BrisConnections’ web site, is expressly stated on the bottom of all ASX and media releases (in the information about BrisConnections), and is specifically stated on holding statements.

2. The Australian Securities Exchange (ASX) code for BrisConnections’ securities is BCSCA with the CA denoting that there are instalments payable.

3. The ASX also disseminates information to all brokers, which information includes the amount paid and the amount payable.

4. The onus is on an investor to be informed before purchasing the units and information was and remains readily available to everyone.

5. In respect of the two underwritten instalments still due, BrisConnections is obligated under the underwriting agreement with Macquarie Capital Advisers Limited and Deutsche Bank AG, Sydney Branch to recover from any defaulting security holder the relevant call required to be paid by that defaulting holder. It is clearly essential and beneficial to all those unit holders who correctly and appropriately meet their obligations by paying their instalments, that BrisConnections uses its best endeavours to recover any unpaid instalments. In that regard, BrisConnections will take a systematic approach to collecting any such outstanding payments.

6. The underwriting of the instalments does not affect the liability of unitholders to meet the instalment but does ensure that funding is always available and the integrity of the structure and project is not threatened.

7. It is not possible to change or defer the instalment structure and still preserve the integrity of the project.

8. When you acquired the securities you assumed the liability to pay the instalments. It is your responsibility (and no-one else’s including Government) to ensure that if you are on the register when the liability for the instalment arises (approximately 21 April 2009), you can afford to pay the instalment. If you have a liability and do not pay the instalment, BrisConnections can take action to recover the amount owing including costs and expenses.

9. It is not our role to create nor can we control the market. However, board and management regularly liaise with the both the financial media, analysts, brokers and institutional investors regarding BrisConnections’ business and prospects in compliance with BrisConnections continuous disclosure requirements. We continue to seek and if possible present BrisConnections to any potential new investor but in these volatile economic times, this remains challenging.

There is strong value in this project and infrastructure projects remain solid long term investments. However, due to the current financial crises our securities are not trading at their true value.

This project is a showcase project and essential for Brisbane’s transport network. Current figures indicate population growth remains strong. Recent figures published by the SEQ Regional Plan indicate that even higher than anticipated land use and population trends remain strong.

We reiterate the project funding is secure and all of the debt facilities raised by BrisConnections for the project are underwritten. The facilities are fully committed and available for their specified maturities, 10 years in the case of the term facilities. Indeed, we have already commenced drawdowns under our syndicated debt facilities.

The instalment structure in itself is also contributing to the project. Each instalment is due when major funding for the project is required.

Unfortunately, it is not possible for you to simply “hand back” the securities as suggested in your email. We recommend that you obtain professional financial advice regarding your situation as we cannot provide you with financial advice nor advise you in relation to the sale of your securities.

We have now recruited approximately 1000 staff and road headers will commence tunnelling works soon.

We have a senior and experienced management team in place. Construction is now progressing in accordance with our program, and we are now focused solely on delivering this crucial piece of infrastructure for the residents of Queensland.

Lastly the Board remains extremely disappointed with the current security price. BrisConnections is doing everything it can to keep the market informed of the development of the underlying project assets and factors that will impact on the cashflow of these assets when the project is completed and begins operations in four years time.

We take this opportunity to remind investors that this is a long journey from financial close to the road opening and generating cashflow.

Thank you for your support and interest in BrisConnections.

Julia · 5 January 2009

Re: Brisconnections shareholders - financial ruin

And this is my further response to Brisconnections:

Thank you for your detailed response to my email.

I'm happy to say that I'm not a shareholder in Brisconnections (not saying this because of any doubt about the validity of the project but purely because I'm grateful not to have such a debt).

My email was prompted by the distress expressed by several members of an internet stock forum of which I'm a member. These people were inexperienced investors with limited funds to invest, and thought all they were risking was their initial outlay of less than $2000. In one case this was just approx $500 - a retired couple finding it hard to live on Centrelink Age Pension.

I've done my own investigations and noted that the further $2 to pay was clearly stated on the E-trade and NAB final screens before committing the Buy trade. But Comsec screenshots show that nowhere in the buying process on that website was the $2 still to pay clearly stated.

Of course the information was available via the PDS, announcements on the ASX and via of the news media. But some of these people - in their inexperience - simply didn't consider the possibility that the amount shown "TO Pay" on the final screen of their Buy order was not all that was involved.
They had gone through the newspaper looking for low priced stocks, understood that BCSCA was involved in building a major piece of infrastructure, and thought that they "couldn't go wrong" with a very small investment.

These people did not know that the 'CA' on the stock code indicated further installments to pay.

I understand that this whole situation must be very unpleasant for all of you at Brisconnections, especially seeing the share price become so stagnant.

And I don't doubt that you are aware of the devastating circumstances some shareholders have found themselves in, due to inexperience. These people stand to lose everything they have, and become homeless.

Brisconnections clearly has its own obligations to fulfil in terms of the underwriting agreement and I fully understand this.

On the one hand it is exasperating that people venture into the market before educating themselves, but on the other hand I think there should be some protection, perhaps in the form of signing a written understanding of the further debt, before anyone can commit a small outlay of a few hundred dollars which subsequently leaves them with a liability of several million.
There is simply something quite ethically wrong with that.

So, thank you for your courtesy in replying to me. I hope that the ultimate decisions by Brisconnections will take into account the lives that are being so affected by a mistake born of naivete.

Garpal Gumnut · 5 January 2009

Re: Brisconnections shareholders - financial ruin

Julia said:
A few days ago I posted an email I'd sent to Brisconnections asking if it was possible to just forfeit the shares. I was doubtful there would be a reply.
Today the following response was received:

I suppose that is clear enough.

The poor bastards who bought them may have a way out if the company lets them in other words. Otherwise they are stuffed it would appear.

gg

Stormin_Norman · 5 January 2009

Re: Brisconnections shareholders - financial ruin

can a shell company buy these shares?

cuttlefish · 5 January 2009

Re: Brisconnections shareholders - financial ruin

Julia said:
A few days ago I posted an email I'd sent to Brisconnections asking if it was possible to just forfeit the shares. I was doubtful there would be a reply.
Today the following response was received:

The quote below is an excerpt from the BCS reply Julia posted:

1. The instalment structure of BrisConnections’ stapled securities was disclosed in the PDS document last July 2008, is described on the BrisConnections’ web site, is expressly stated on the bottom of all ASX and media releases (in the information about BrisConnections), and is specifically stated on holding statements.

I have bolded part of it about BCS saying that there is information about the instalment structure at the bottom of all ASX announcements.

I can't find it in quite a few of the announcements - for example the market sensitive announcement made by BCS on 15th of August 2008 (the first market sensitive (i.e. !) announcement made by BCS after their announcement of being admitted to the official list. If someone else can point out to me where I'm missing it that will help clear up my confusion.

The link to the BCS announcements on the ASX site is here (or go to announcements search page and search for announcements by BCS in 2008).

http://www.asx.com.au/asx/statistic...ssuerCode=bcs&timeFrameSearchType=Y&year=2008

I also can't find it in the the response to the ASX price query announcement (another announcement flagged as market sensitive) made on the 8th of September 2009.

For myself when I research a company I often only read the market sensitive announcements - as far as I can tell the information about the units being partly paid is not in these two announcements but its entirely possible that I've missed it.

Something else that I found interesting whilst browsing through the announcements is that many of the companies that lodged substantial shareholder notices, in the 'class of shares' column, put 'ordinary fully paid shares' as the class of share.

For example - on 11/09/2008 Morgan Stanley refers to them as Fully Paid Units in its ceasing to be a substantial shareholder notice.

On 12/09/2008 Qld Investment Corporation refers to them as "Ordinary shares fully paid" in its announcement about a change in substantial shareholding.

These announcements about substantial holdings are filled in and filed by the investor/institution concerned, not by BCS, but the referral to them as fully paid in these notices could easily have caused confusion for any BCS investor that was perusing the announcements.

MQG also refers to the class of share as 'FPS' (Fully Paid Stapled) in their initial substantial shareholder notice on 1st of August 2008 and refers to them as FPS in many of their subsequent substantial shareholder announcements (I didn't open them all but in all of the ones I did open they were referred to as FPS).

No wonder investors were confused, when the shares were repeatedly referred to as Fully Paid in these various notices by the underwriter of the partly paid securities. (Or maybe I'm confused and the securities that MQG did sell on market were actually Fully Paid )

Please note - my interpretation of these ASX announcements may be incorrect - so refer to the raw announcements for verification and further information.

joeyjoejoe · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Stormin_Norman said:
can a shell company buy these shares?

this makes me think.

couldnt you create a PTY LTD company then sell the shares from yourself as an individual to the company OFF MARKET.......then declare the company bankrupt????????????

even as the Public officer you cant be liable for the debt????????

am i wrong in thinking this???????

"

What is a company?

In many ways a company is similar to a sole trader or partnership, except that it exists as a separate legal entity from the owners (who are called shareholders). This means that in most circumstances, personal assets of the owners cannot be touched to pay for the debts of the company.

"
http://smallbusiness.smh.com.au/starting/finance/what-is-a-company-907098771.html

this would only cost between $1k - $2k to set up and follow through from go to woe

its worth looking into........ if i was in this situation (which im not ) i would probably approach my accountant with this idea.

although page 3 dosent give me as much hope

"sometimes a director can be held personally responsible for actions that are clearly beyond the ability of the company to pay."

but still.. it still MAY be worth looking into. just use the word "INVESTMENTS" in the company name and say it was setup for major trading with high risk (theres nothing illegal about that as its not a superfund)........

at least you would have some form of CASE against BRISC in that "im not liable because its company debt"

cuttlefish · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Actually looking through the MQG substantial holder announcements - they appear to have changed how they refer to the securities between the 20th of Oct and the 22nd of Oct 2008.

In the ASX announcement on 20th of Oct 2008 MQG stated that they had reduced their holding of 'Fully Paid Stapled (FPS)' from 60,402,741 to 53,816,335.

In the ASX announcement on 22nd of Oct 2008 MQG stated that they had reduced their holding of 'Stapled Securities (SS)' from 53,816,335 to 48,728,382.

As I've stated - my interpretation of this information may be incorrect - refer to the original announcements for verification and further information.

Dondi · 6 January 2009

Re: Brisconnections shareholders - financial ruin

I think the fact that they said..

"we are considering whether there are options available which will preserve the integrity and still honour our commitments." means they know this whole thing is a fiasco and are at least trying to come up with a compromise.

One other thing I find strange is that they keep going on about how many warnings they have posted on announcements and so forth but if this is the case then why have so many people been trapped. Surely this wouldn't be the case if they (BrisC) and brokers were as transparent as they say they were.

Also, if cuttlefish is right and the banks/underwriters didn't even know what class of share these were how the hell is the average investor supposed to know!

cuttlefish · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Another ASX announcement by BCS where I don't see any explicit referral to the partly paid nature of the units is the letter to shareholders released on 26/08/2008. This letter is one welcoming people as a security holder of Brisconnections.

This letter makes a mention that a distribution of 15.27c will be paid (and refers the reader to the PDS to find out more about the distribution). That is the distribution that was subsequently deferred.

It also has a section on risk at the bottom that as far as I can tell doesn't mention the partly paid nature of the securities and the liability incurred on purchase.

My interpretation of these announcements may be incorrect - refer to the original announcements for verification and further details.

cuttlefish · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Another announcement by BCS where I can't see any mention of the partly paid nature of the security is the 'Top 20 security holders' statement released to the ASX on the 8th of August 2008.

This announcement simply refers to them as 'securities'. It also refers readers to the Substantial Shareholder Notice lodged by Macquarie - the same notice I mentioned above where Macquarie refers to the securities as 'Fully Paid Stapled' in their notice. I note that BCS didn't chose to correct or mention this mistake when they referred readers to the MQG notice from this Top 20 shareholder notice.

cuttlefish · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Interestingly the Indicative Top 20, released on 30/07/2008 DOES refer to them as partly paid stapled units.

Also the Appendix 3B (A document I typically look for to determine capital strucuture of a company before investing) released on 1/08/2008 does also correctly and explicitly state that they are ordinary partly paid, and the time frames that the additional two $1 payments are due, and refers readers to the PDS.

So there is a fair bit of inconsistency - I doubt any of it is intentional on either BCS or MQG or any of the other institutions behalf - but in my view it is easy to see how anyone reading the announcements could have become confused.

And clearly I need to get a life after spending an evening reading these announcements about a stock I don't even own

Julia · 6 January 2009

Re: Brisconnections shareholders - financial ruin

cuttlefish said:
And clearly I need to get a life after spending an evening reading these announcements about a stock I don't even own

As do I, it would seem, given that I actually had a dream about this stock last night.

lesm · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Calliope said:
I am extremely sorry for your predicament and I can understand if you found my post irritating. I was, however, specifically replying to Rocket who is an experienced trader who knew the ropes. He knew how to get the information he wanted but he didn't look.

There is a world of difference between his case and yours.

I still feel that the underwriters will not pursue the little guys. It is unfortunate though that they will keep you dangling for a time. I wish you and your family the best of luck.

Agree with Calliope.

Hope that when the company and its underwriters look at this from a commercial viability perspective in determining how to approach debt recovery activities, permit the little guys who made a genuine mistake or error simply return their shares.

Any active traders caught up in this should have known better.

Hang in their Bushie. Try and get good advice on how to manage this situation and protect you and your family's interests. Best of luck.

thermalmonster · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Cuttlefish & Julia,
All of this assistance is greatly appreciated by myself & I am sure rocket & Bushie.

Are you able to download theese announcements in case they are required for future evidence.

I think if the ASA drive a media push on this now, wheels might start to turn in the right direction, The shares are still not moving at all

cuttlefish · 6 January 2009

Re: Brisconnections shareholders - financial ruin

thermalmonster - all asx announcements can be found by searching the announcements section of the ASX site.

I've put the dates on any announcements I've mentioned above so its easy to correlate them. There's a link below, or go to the announcements link on the left side of the www.asx.com.au page and search for BCS announcements in 2008.

http://www.asx.com.au/asx/statistic...ssuerCode=bcs&timeFrameSearchType=Y&year=2008

As I've mentioned earlier - its bests not to trust my interpretations but to look at the raw announcements to verify anything I've noted in the earlier posts.

sails · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Thermal - I guess you probably know you can save a copy of PDF files on to your PC - just in case you didn't there is usually a "Save" icon on the top left hand side of the PDF window.

thermalmonster · 6 January 2009

Re: Brisconnections shareholders - financial ruin

Yep, sorted cheers

Cobber · 7 January 2009

Re: Brisconnections shareholders - financial ruin

Enzyme said:
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!

What is the SRN and where do I find it?

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