BCS - BrisConnections Unit Trusts

[Sean K]

Re: BrisConnections charity outcome

That is unbelievable they specifically say they accept Brisconnection shares, they are either mad or believe that no company would ask a Charity to stump up millions of dollars.

JAB Charity is a real philanthapist isn't he?

Interesting first post.

Maybe he'll be back to explain.

Or not.

 

[Knobby22]

Re: BrisConnections charity outcome

That is unbelievable they specifically say they accept Brisconnection shares, they are either mad or believe that no company would ask a Charity to stump up millions of dollars.

The truth is that this is a nightmare for Maquarie and they cannot have extensive TV coverage of people losing their houses due to their terribly designed float for which they were paid millions. They will have to cough up the money to avoid this. They have already said they will in effect. The charity is making a bet, if they win they might make a fair bit of cash, if they lose there will be no way for Maquarie to collect.

The whole thing is very amusing as long as you don't own any Brisconnection shares.

 

[Sunder]

Re: Someone is accumulating BCSCA

See in bold below - your quote... My understanding is that "long term future return" or "great investment" could convey a similar general meaning.

And in the remainder of my post I was asking why QIC would want these when Macquarie and other institutions want no part of this investment (if the media reports are correct).

I don't see how you correlate those two together. I would never consider a 5 year term deposit at 4%pa a "great investment", but the returns are definitely there, and they are all definitely long term.

A day trader might play with what remains out of Babcock and Brown subsidaries, but a super fund probably would have no desire to go near it. QIC and Macquarie have different objectives. QIC have probably been advised that the call will still go out, and if it's "likely" they have to pay the remaining $2, they may as well gamble on a return some time in the next 30 years before their members retire, rather than just pay the $2, and maybe get a few cents back after the debts have been paid.

 

[JAB_Charity]

Re: BrisConnections charity outcome

"AB_Charity;419454 - BrisConnections (BCSCA) units can be transfered to charity. See, for instance, this charity to donate units: http://www.Barrow.ORG.AU/"

Huh?

You serious?

Yes -- the charitable trust is actively seeking BrisConnections units. There are many complex dynamics in play with this stock -- and the $1 calls can be met with a potential market re-evaluation of the fundamentals of the units (driven by the prime long-term 45 year tollway concession), the charity's cash position and capacity to raise further donations before the 29 April final call -- and also trading out of the position.

David C. Barrow, Trustee, The Julie Anne Barrow Charitable Trust

 

[Sunder]

Re: BrisConnections charity outcome

"AB_Charity;419454 - BrisConnections (BCSCA) units can be transfered to charity. See, for instance, this charity to donate units: http://www.Barrow.ORG.AU/"

Huh?

You serious?

Now this bit on their page was interesting:

2. Market Value of BrisConnections Units after payment of next instalment.

Since the BrisConnections units commenced trading on ASX at $0.001 in October 2008, there have been three broker reports issued, the most recent on 29 January 2009.

The average fully paid target price of the three reports is $1.28 and the average DCF valuation is $1.80.

So if you could get them for less than 28c post second installment, they'd be considered good value? Did I read that right?

 

[drsmith]

Re: BrisConnections charity outcome

The truth is that this is a nightmare for Maquarie and they cannot have extensive TV coverage of people losing their houses due to their terribly designed float for which they were paid millions. They will have to cough up the money to avoid this. They have already said they will in effect. The charity is making a bet, if they win they might make a fair bit of cash, if they lose there will be no way for Maquarie to collect.

The whole thing is very amusing as long as you don't own any Brisconnection shares.

Politically, the Queensland Government won't be too keen on extensive TV coverage of people losing their houses either. This is something Macquarie could potentially use to encourage the Queensland Government (and/or QIC) to cough up some of the expected shortfall in the instalment payments.

Some idle speculation on how it might play out.

Firstly, Macquarie, DB and the Queensland Government will use the Easter period to negotiate an agreement about what proportion each is to contribute towards the expected shortfall in instalment payments (no rest for the wicked here). The minimum QIC will cough up will be for their 10% holding and possibly more (I'm sure Macquarie would love QIC to take on an increased equity stake). The Queensland Government may also directly contribute towards any shortfall but only after it has exhausted QIC as an option.

If the above reach agreement on their individual exposures to the instalment shortfall, the meeting resolutions then have to be dealt with. Bolton won't succeed with his resolution to wind up the trusts as more than 25% is in hands friendly to Macquarie. Getting over 50% to remove the responsible entity is a far more interesting proposition however. If achieved this could result in the winding up of the trusts if no suitable replacement is elected.

I suspect that for the Queensland Govenment putting the project at risk will be seen as a potentially greater problem than dealing with questions about the independence of the judiciary. The court judgment on the resolutions on Tuesday morning will therefore fall in favour of Macquarie.

While not exactly ethical this is an outcome from most most involved would walk away relieved. The question then is to what extent the banking syndicate (lending ~$3bn) has lawyers going over their own loan agreements for the project.

Remember the above is only speculation. Whatever happens, tuesday will be an interesting day.

 

[brty]

Didn't Briscon really shoot themselves in the foot when they lost $425m in Interest rate swaps??

If this next instalment raises the full amount $320m? it all virtually disappears covering the existing losses. If Briscon is meant to be stumping up $1b with the rest borrowed, how can they do this with only $600m left from the 3 payments??
(Assuming of course no blowouts in costs)

In my mind, this is worth a lot less than 28c after this next instalment is paid, as the company will have to go after further funds in the future from other sources (probably equity/equity partner). Given current conditions, they will pay a high price in equity terms to gain this new money.

Stumping up $2 more dollars per each current share has a negative value in discounted cashflow terms for the future. Any institution that votes for anything other than winding up the company is not looking out for the interests of their investors (except maybe Macquarie who are/could be, up for more dollars if it does collapse) and I would expect a few directors to be hoping nothing eventuates from their decisions.

brty

 

[JAB_Charity]

BrisConnections -- 25.04% voting-block

As at close of BrisConnections (BCSCA) trading on THU 9 April 2009 there is a 25.04% quasi-block holding as follows:

8.06% Macquarie Group Limited and controlled bodies corporate
7.00% Capital Group Companies Inc
9.98% Queensland Investment Corporation (QIC)

If voted as a block this 25.04% is sufficient to defeat the required 75% of votes for the following Special Resolutions (at the 10am 14 April 2009 EGM):

PART A
Resolution 1
That the BrisConnections Holding Trust and the BrisConnections Investment Trust commence to be wound up on the next business day following the date this resolution is passed.

PART B

Resolution 2
That the constitutions of the BrisConnections Holding Trust and the BrisConnections Investment Trust be amended by inserting a new article 9.4A. [payment of the 5.95 cents distribution]

Resolution 3
That article 4.6(a) of the constitutions of the BrisConnections Holding Trust and the BrisConnections Investment Trust be amended by adding at the end of that article the words "and will do so on the Resolution of members".

[note: Resolution 4 is not a special resolution -- see below]

Resolution 5
That article 11.3 of the constitutions of the BrisConnections Holding Trust and the BrisConnections Investment Trust be amended by deleting in its entirety the sentence beginning "Subject to the Corporations Act".
[including performance of obligations in the Transaction Documents to build and operate the Brisbane Airport toll road]

----------------------------------------

The other resolutions are Ordinary Resolutions -- only requiring greater than 50% (majority) of the vote:

Resolution 4
That the members resolve to postpone the payment date for the instalment due by members on 29 April 2009 until 29 January 2010.
[note: Resolution 4 is arguably contingent on Special Resolution 3 - requiring 75% vote]

Resolution 6
That BrisConnections Management Company Limited be removed as the responsible entity.

Resolution 7
That a replacement responsible entity be appointed immediately after the meeting at which this regulation is passed and if a replacement is not then available or capable of appointment at that time then an application will be made to the court in accordance with the Corporation Act to appoint a temporary responsible entity.

David C. Barrow, Trustee, The Julie Anne Barrow Charitable Trust

http://www.barrow.org.au/

 

[Prospector]

Hi David
At risk of hijacking this thread, I have now looked at Julie Anne Barrow Charitable Trust website. It seems that you are offering the 'investors' a lifeline, but also see this as a long term investment decision for the Trust. But also have access to significant resources if you are able to meet the instalment demand. Maybe all the posters here have made other moves with their shares, but there may still be some who are interested in them.
All the best.

 

[JAB_Charity]

Hi David
...Julie Anne Barrow Charitable Trust website. It seems that you are offering the 'investors' a lifeline, but also see this as a long term investment decision for the Trust...

Hello Prospector,

We operate solely for charitable purposes -- including the relief of poverty, the relief of the needs of the aged, the relief of sickness or distress, the advancement of religion, the advancement of education, other purposes beneficial to the community, and the provision of child care services on a non-profit basis.

If the donation of shares (BCSCA units, for instance) to our charitable trust alleviates some stress on the part of retail investors then we welcome that outcome broadly in alignment with out mission -- but it is the sole charitable purpose of the trust to which we are committed.

Amongst other investment opportunities, it is the view of The Julie Anne Barrow Charitable Trust that the BrisConnections (BCSCA) Units are attractive assets to acquire by way of share transfer gift.

As we have stated in a previous post: There are complex dynamics at play with BCSCA. The $1 calls can potentially be met by a market re-evaluation of the fundamentals of units (driven by the long-term 45 year toll road concession), the charity's cash position and capacity to raise further donations before the 29 April final call -- and we may also trade out.

In the view of our charity, this also accords with Justice Robson's recent decision Re Australian Style Investments Pty Ltd [2009] VSC 128 (6 April 2009) 66 at [225]:

The obligation to pay an instalment is only imposed on those unit holders identified as being registered on 29 April 2009. No obligation arises out of being a unit holder as such. The obligation only arises if the person is a unit holder on a certain day. Being a unit holder does not by itself give rise to any contingent liability to pay any instalment. The liability is not sourced from the fact that some months earlier before the instalment date the person held units. The liability is solely sourced from the person being a unit holder on the instalment day.

David C. Barrow, Trustee, The Julie Anne Barrow Charitable Trust

http://www.barrow.org.au

 

[drsmith]

Amongst other investment opportunities, it is the view of The Julie Anne Barrow Charitable Trust that the BrisConnections (BCSCA) Units are attractive assets to acquire by way of share transfer gift.

As we have stated in a previous post: There are complex dynamics at play with BCSCA. The $1 calls can potentially be met by a market re-evaluation of the fundamentals of units (driven by the long-term 45 year toll road concession), the charity's cash position and capacity to raise further donations before the 29 April final call -- and we may also trade out.

I'll start with the last point first.

You will only have up to Wednesday April 16 to trade out of BCSCA before they cease trading. Assuming the units are in trading halt all day Tuesday, that leaves one day.

http://www.asx.com.au/asxpdf/20090406/pdf/31gy4srth6dbtq.pdf

There are also currently no buyers for the units.

With regard to any market re-evaluation do you think this is going to occur between now and when BCSCB start trading (May 7) ?
From a pure investment perspective it would be better to let someone else pay the $1 instalment and buy BCSCB when they start trading on May 7. You might be able to buy them for $0.25 or perhaps even $0.001.

I don't know anything about the tax status of charitable trusts and whether there's something to be gained from that perspective but from a pure investment perspective what you are doing does not make sense. You may relieve some retail investors of their obligations but then what about the trust's obligations under the $1 call. If the underwriters do choose to relieve retail holders of their instalment obligations (which I suspect they will in the end anyway), will your charity be clssified as a retail holder under such a scheme ?
Your charity may well have a fight on it's hands to avoid the upcoming instalment liability associated with the units.

 

[JAB_Charity]

Thankyou for your response drsmith. You make some good points for us to clarify from our point of view.

You will only have up to Wednesday April 16 to trade out of BCSCA before they cease trading. Assuming the units are in trading halt all day Tuesday, that leaves one day.

http://www.asx.com.au/asxpdf/20090406/pdf/31gy4srth6dbtq.pdf

Yes - that's quite right. Wednesday [15th April] is the last day for all unitholders to trade BCSCA on the ASX. And by extension the last day for us to potentially trade out of our own position on the ASX.

However, we are receiving donations by way of off-market transfers of shares. You can see from your link that:

Last day for accepting transfers [inc off-market] without second call money attached is WED 22 April 2009.

We can also transfer shares to other off-market buyers up until 22 April -- though we are currently focused on receiving off-market share transfers up to this date.

+with your second point:

With regard to any market re-evaluation do you think this is going to occur between now and when BCSCB start trading (May 7) ?
From a pure investment perspective it would be better to let someone else pay the $1 instalment and buy BCSCB when they start trading on May 7. You might be able to buy them for $0.25 or perhaps even $0.001.

Well for every investor these sorts of decisions are a matter of opinion and judgment -- and investors have different views about the future. Where the BrisConnections venture and ownership may end up is quite uncertain and so with this there is also quite a distribution of possible outcomes -- which is a longer way of saying that there is risk involved in holding the units.

We have set out our views on the BrisConnections invest aspects at:

http://www.barrow.org.au/page/investment_strategy.html


That was helpful drsmith. Are there any others points we can clarify?


David Barrow, Trustee, The Julie Anne Barrow Charitable Trust

http://www.barrow.org.au

 

[Macquack]

I agree with you drsmith. I dont know where this guy is coming from.

Nobody thinks this is a good investment except for Bolton and Byrnes who are attempting some sort of scam to profit short term.

On the possibility of the underwriters relieving retail investors of their obligation for the $1 call, the units are then forfeited so what is the point of the exercise.

 

[JAB_Charity]

Hello Macquack

...On the possibility of the underwriters relieving retail investors of their obligation for the $1 call, the units are then forfeited so what is the point of the exercise.

Yes -- that could be a good outcome for unitholders seeking to avoid the 29 April 2009 liability of $1 instalment, however, the preliminary deal proposed by Macquarie has not reached agreement.

See (I'm sure most are aware):

http://asx.com.au/asxpdf/20090408/pdf/31gzv6m7x7f3kw.pdf

Perhaps another deal will resurrect? With or without voting conditions?

David C. Barrow, Trustee, The Julie Anne Barrow Charitable Trust

http://www.barrow.org.au

 

[drsmith]

That was helpful drsmith. Are there any others points we can clarify?

Thank you David for the reply. One question does comes to mind.

How are you going to vote on the upcoming resolutions ?

 

[JAB_Charity]

Thank you David for the reply. One question does comes to mind.

How are you going to vote on the upcoming resolutions ?

I hope it does not come across as too coy to say that essentially we are watching developments closely.

We can, though, say that if a deal like the Macquarie proposal was resurrected -- waiving the $1 instalment on individual retail investors -- well, to the extent that such a deal was conditional again on certain resolutions being defeated -- then from a moral point of view we would not like to contribute to preventing a possible exit for retail investors. Which is a long way of saying that we would not like to vote yes where yes means no to the likely avoidance of debt collection of retail investors – however, we do always act in pursuit of our solely charitable purpose.

Presently there is of course no such Macquarie resurrected agreement.

And we have discussed our view with Nicholas Bolton of ASI -- when he asked the same quite-reasonable question of us.


David C. Barrow, Trustee, The Julie Anne Barrow Charitable Trust

http://www.barrow.org.au

 

[drsmith]

So, in short if the underwriters let retail unitholders off the hook prior to the vote you will vote against Nicholas Bolton's resolutions and if not you will support them.

Correct ?

 

[Macquack]

..... Which is a long way of saying that we would not like to vote yes where yes means no to the likely avoidance of debt collection of retail investors – however, we do always act in pursuit of our solely charitable purpose.

To many double-negatives in that statement, David.

I've read it twenty times and still don't get it.

 

[JAB_Charity]

So, in short if the underwriters let retail unitholders off the hook prior to the vote you will vote against Nicholas Bolton's resolutions and if not you will support them.

Correct ?

Well -- we'll all see how the situation develops.

There is of course, as we know, the decision of Justice Dutney to be handed down in the Supreme Court of Queensland on whether Macquarie may successfully injunct the 14 April meeting itself. This slated for 9am before the 10am meeting.

+I am flying from Melbourne to Brisbane on the following VirginBlue

Flight No DJ321

DEPARTING
Melbourne Virgin Blue T3 Terminal
1000hr (10:00am), Sun 12 Apr 2009

ARRIVING
Brisbane Domestic Terminal
1210hr (12:10pm), Sun 12 Apr 2009


I will personally be on the ground at the 10am 14 April 2009 meeting. I can be contacted on my Mbl 0448 778 737


The Julie Anne Barrow Charitable Trust continues to receive donations of BrisConnections units by off-market transfer.


David C. Barrow, Trustee, The Julie Anne Barrow Charitable Trust

http://barrow.org.au/

 

[drsmith]

Well -- we'll all see how the situation develops.

There is of course, as we know, the decision of Justice Dutney to be handed down in the Supreme Court of Queensland on whether Macquarie may successfully injunct the 14 April meeting itself. This slated for 9am before the 10am meeting.

There is only a limited number of ways the situation can develop.

Firstly, if Justice Dutney rules in favour of Macquarie and there's no vote on any of the resolutions, your charity along with all the retail holders are at the mercy of the underwriters. You won't be able to negotiate much from that position.

For the vote going ahead the original question stands.

If the underwriters let retail unitholders off the hook prior to the vote will you vote against Nicholas Bolton's resolutions and if not will you support his resolutions ?

+I am flying from Melbourne to Brisbane.....SNIP!.....Sun 12 Apr 2009

Will you be involved in discussions with other related parties prior to the meeting on Tuesday ?

I will personally be on the ground at the 10am 14 April 2009 meeting. I can be contacted on my Mbl 0448 778 737

The Julie Anne Barrow Charitable Trust continues to receive donations of BrisConnections units by off-market transfer.

If it goes pear shaped for Nick Bolton he'll be able to hand you his off market transfer form in person.