Business Spectator reports:
http://www.businessspectator.com.au...he-hook-pd20090417-R6VQA?OpenDocument&src=kgb
Commentary
10:22 AM, 17 Apr 2009
Robert Gottliebsen
Is Bolton off the hook?
I found the KGB interrogation of Queensland Treasurer Andrew Fraser very instructive. Fraser is clearly not going to put money into BrisConnections unless he feels that the project is in jeopardy. He will not use tax-payer dollars simply to save small shareholders or underwriters, but he clearly fears that this week's meeting may not have settled the matter and the project might face more threats.
We now have court actions trying to overturn the meeting and there are other moves in the pipeline due to the simple fact that most of the foreign banks do not want to lend to the project and are looking for a way out.
The same applies to joint call-underwriter Deutsche. Fraser warns that any major who walks away will find it hard to do business in Queensland in the long term. But there only needs to be one or two court cases that go against BrisConnections to provide a loophole for some to escape, thereby putting the project in jeopardy – hence Fraser’s caution.
The fact that Leighton was prepared to pay Nick Bolton $4.5 million shows that the majors, probably including the Queensland government, are going to do whatever it takes to keep the project moving. For example, while the failure to disclose the Leighton deal until the BrisConnections meeting is going to be hard to defend, it was clearly a strategic move to stop court actions prior to the meeting.
Nick Bolton, who saw the weakness in the BrisConnections situation before anyone else, will now faces a challenge to hold on to the money if his companies are required to pay the call.
In our Conversation Peter Rawling, of lawyers Macpherson and Kelley, showed one way Bolton might have safeguarded the $4.5million:
"There is a lot of commentary that Nick Bolton remains exposed to Brisconnections, but if normal limited liability principles apply to ASL's (Bolton’s Australian Style) ownership of the BrisConnections shares, Bolton will not be personally liable.
"Further, if a special purpose subsidiary (SPV) was incorporated to buy the shares, then ASL will also not be exposed. Bolton was reported as having said as much, that the share ownership is 'insulated'.
“So Bolton will have no personal exposure, he will not be bankrupted. All that will happen, is that a company ultimately owned by him may be liquidated.
"And if Bolton (or ASL) was paid a procurement fee for agreeing to procure the SPV subsidiary to grant the proxy, that fee would be protected from the liquidation of the SPV. All in all, a good deal for Bolton.”
Other lawyers will no doubt take a different view of the level of protection Nick Bolton has, but we can be certain that he will be pursued very vigorously in the courts by many of the parties involved.