BCS - BrisConnections Unit Trusts

[nathanblack]

Thats a very good point Julia. I guess its similar to the many people that would never declare bankrupt out of some kind of pride(right or wrong), even when bankruptcy is the better financial decision.

I would think their is no recourse and it is just the price they pay. an expensive lesson learnt.

 

[Grey Ghost]

from yesterdays herald sun, it would appear mum and dads have or will finally be let off the hook. Macquarie and Co have agreed to take up all forfeited shares and drop legal proceedures.

The continue to chase Nick Bolton, via ASI company.

I wonder what redress will exist for those investors who did pay up on the installment? It hardly seems fair that their financial situation has been so compromised and others are 'off the hook'.

Does anyone know if legal action is still being taken against the Julie Anne Barrow Trust aka David Barrow?
Haven't heard too much of it lately.

As an aside I notice the shares in Brisconnections are now at 15c. I suspect as the time for the second installment gets closer they are likely to come under further pressure.

 

[investorpaul]

Does anyone know if legal action is still being taken against the Julie Anne Barrow Trust aka David Barrow?
Haven't heard too much of it lately.

As an aside I notice the shares in Brisconnections are now at 15c. I suspect as the time for the second installment gets closer they are likely to come under further pressure.

Ouch 15cents, looks like it heading down the same path as before????

Not good.

If it gets anywhere near 10 cents you are then required to pay $10 for every $1 invested. Not many "mum and dad" investors would have access to that kind of cash in my opinion. I hope this time ASX issue a warning or notice about the stock

 

[investorpaul]

Ouch 15cents, looks like it heading down the same path as before????

Not good.

If it gets anywhere near 10 cents you are then required to pay $10 for every $1 invested. Not many "mum and dad" investors would have access to that kind of cash in my opinion. I hope this time ASX issue a warning or notice about the stock

Down to 11cents, another death spiral in my opinion. The ASX and ASIC should step in now and suspend trading, that way no more people will get caught out.

Very hard to see a way forward until the final $1 is paid out.

 

[drsmith]

Now down to $0.01 with two buyers for a total of 2 million at $0.001.

Hopefully this time the underwriters will have the common sense to offer all remaining minority shareholders a way out without having to cough up the final instalment.

 

[JAB_Charity]

ASX Circular re Third and Final Instalment has been released 11 Jan 2010:

http://www.asx.com.au/asxpdf/20100111/pdf/31n3wnxdthsbcq.pdf

And it appears that trading on a deferred settlement basis (from 15 Jan 2010) will be allowed for the BCSCB units, unlike the suspension of BCSCA units:

http://www.asx.com.au/asxpdf/20090406/pdf/31gyckr2bn6gkz.pdf

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In my view, there are compelling reasons for acquiring BCSCB units, including:

(1) Long-term view of Brisbane Airport Link is positive, based in part on investment information provided by responsible persons of the BrisConnections Management Company Limited such as recent Broker and Investor Forum Presentations, on which I and companies associated with me have relied:

http://www.asx.com.au/asxpdf/20091127/pdf/31mczwxzsbhx47.pdf

http://www.asx.com.au/asxpdf/20091130/pdf/31mf0ptcfbm8gx.pdf

(2) There are complex dynamics in play before the 29 Jan 2010 final instalment, including such scenarios as:

(a) the $1 call could be potentially met by a market re-evaluation of unit fundamentals (driven by the unique, scarce, highly valuable asset: the long-term 45 year toll road concession)​

(b) a surplus could be realised at a Public Auction of the units to be held in or around March 2010​

(c) the Brisbane Airport Link project is well placed for a Privatisation and re-issue to market​

(d) Market Signals of BrisConnections Value:​

(i) On 30 March 2009 Macquarie Group Limited purchased 1,429,332 (8.055%) BCSCA units on-market.​

(ii) On 15 April 2009 it was announced on the ASX that Leighton Holdings had paid $4.5m for the 77,400,933 (19.84%) voting rights (only) of Australian Style Investments.​

(iii) On 21 April 2009 Macquarie Group Limited offered BCSCA unitholders with up to 50,000 of holdings an opportunity to exit the register by 5pm 4 May 2009 without meeting $2 liabilities.​

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As well as relying on the public announcements of BrisConnections management as to the positive value of the BrisConnections Stapled units, I also rely on:

(A) the BrisCon Trust Constitutions, which among other things:

(a) state in article 4.9(a) that a Defaulted Unit (together with the defaulted Stapled Units) "shall" be sold by the Manager or its agent​

(b) state in article 4.9(e) that the Manager "may" set a reserve price at auction as then set out in sub-articles 4.9(e)(a) and 4.9(e)(b)​

(c) state in sub-article 4.9(e)(a) that the reserve price at auction will be at a price "not exceeding" the amount then set out in that sub-article 4.9(e)(a)​

(B) the Underwriting Agreement, which among other things:

(a) states in article 5.7 that BrisCon "must" conduct a public auction of the Defaulted Units​

(b) states under the articles of section 7 that the underwriters "must" pay to the BrisCon an amount equal to any Final Call shortfall on Defaulted Units (of the second call of the third and final instalment), even though such a payment is not actually a Loan in my view, and in any event Defaulted Units will be transferred by the Transfer Date to the underwriters on or around 29 July 2010​

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DISCLOSURE

I, David Barrow, have been acquiring significant BCSCB units (although always less than 5% of units on issue) on and off-market since 7 May 2009 in the price range $0.001 to $1.000

The Julie Anne Barrow Charitable Trust, of which I am a director of the corporate trustee for this charity, now only holds 20 BrisConnections Stapled units -- whereas the unit holdings as at 29 April 2009 were 5,609,666.

 

[JAB_Charity]

BrisCon has resumed trading 15 Jan 2010 deferred settlement with no further instalment to pay for the buyers.

New ASX code is BCS.


At time of post there are buyers for 1,524,000 units stacked up on the bid side of the market depth -- but there are no sellers.

It's the opposite of the Nicholas Bolton era when the sellers were stacked up on the sell side but there were no buyers.


Current situation could be due to restrictions on brokers for sellers to demonstrate that they have met the $1 final call before allowing the trade.

In any case, there is a BrisCon Private Auction alternative:

http://www.settlemate.net.au/PrivateAuction/tabid/60/Default.aspx

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DISCLOSURE

I, David Barrow and my sole-director companies SettleMate Pty Ltd and DefaMate Pty Ltd are holding 1,200,000 BrisCon units

The Julie Anne Barrow Charitable Trust, of which I am a director of the corporate trustee for this charity, now only holds 20 BrisConnections Stapled units -- whereas the unit holdings as at 29 April 2009 were 5,609,666

 

[drsmith]

The Julie Anne Barrow Charitable Trust, of which I am a director of the corporate trustee for this charity, now only holds 20 BrisConnections Stapled units -- whereas the unit holdings as at 29 April 2009 were 5,609,666

Did the charity get off the hook in relation to the remainder ?

It will be interesting to see how the unit price goes now the market knows there's a keen seller of 14% of the tradable units at $1.20.

 

[JAB_Charity]

Did the charity get off the hook in relation to the remainder ?

Hello Dr Smith,

I was granted Leave by The Honourable Justice Goldberg on 8 September 2009 to commence and carry on proceedings in Federal Court of Australia (matter VID486/2009) for Super Choice Now Pty Ltd as corporate trustee for The Julie Anne Barrow Charitable Trust in defence of BrisConnections statutory demand for $5,609,666 said to be owing.


First time such leave had been granted to a non-solicitor in the history of the Federal Court. Leave has never been granted in the English Courts.

See: http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2009/1026.html


Successful then on 14 September 2009 in setting aside $5,609,666 Statutory Demands with costs awarded against BrisConnections.


Currently chasing BrisConnections to pay legal costs of $28,974 +GST owing.

I may need to chase BrisCon all the way up to the High Court for them to pay up on that front.

Regards, David

 

[JAB_Charity]

"BrisCon arbitrageur David Barrow in share auction" -- The Australian 16 Jan 2010

http://www.theaustralian.com.au/bus...in-share-auction/story-e6frg8zx-1225820166075

Extract:

Mr Barrow yesterday took matters into his own hands, trying to offload his liability by launching a private auction to sell his units at a reserve price of $1.20 in the hope of making a quick profit.

...BrisCon communications general manager Patrick Southam said he was "concerned about the legality" of Mr Burrow's auction.

"We are not associated with this offer-proposal in any way," he said. "If payment of the third and final $1 instalment is not received on or before January 29, it is not possible for a BCSCB holder to deal in BrisConnections securities without payment of the outstanding instalment first."

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The Private Auction is perfectly legal for Sophisticated or Professional Investors [see section 708 of Corporations Act] in three easy steps:

http://www.settlemate.net.au/PrivateAuction/tabid/60/Default.aspx

(1) Sophisticated Investor sends Chq A for $1 instalment to BrisCon on Mr Barrow's behalf (cleared by 10 Feb 2010)

(2) Sophisticated Investor sends Chq B to Mr Barrow for excess sale price per unit above $1

(3) BrisConnections fully paid BCS units are issued to Mr Barrow, who immediately transfers ownership of these to Sophisticated Investor on exercise of effective put option.


Three steps. Nice and easy. Legal. BrisCon gets it money. Investor gets slice of BrisCon infrastructure project. Mr Barrow and his companies SettleMate Pty Ltd and DefaMate Pty Ltd get a financing fee for ultimately bringing BrisCon and the new Investor together. Everybody’s happy.

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Why is 10 Feb 2010 the date to send instalment cheque to BrisCon instead of 29 Jan 2010?

Well, Wed 10 Feb 2010 is within 10 days after Notice Failure to Pay Instalment will be issued Mon 1 February 2010 as per article 4.7 of the BrisConnections Constitutions: http://www.asx.com.au/asxpdf/20080730/pdf/31bfg8cbhg5rm7.pdf

If a unitholder pays up the $1 instalment by Thu 11 Feb 2010 BrisCon will take the money and issue the fully paid BCS units.

 

[Macquack]

In my view, there are compelling reasons for acquiring BCSCB units, including:


(2) There are complex dynamics in play before the 29 Jan 2010 final instalment, including such scenarios as:

(d) Market Signals of BrisConnections Value:
(i) On 30 March 2009 Macquarie Group Limited purchased 1,429,332 (8.055%) BCSCA units on-market.
(ii) On 15 April 2009 it was announced on the ASX that Leighton Holdings had paid $4.5m for the 77,400,933 (19.84%) voting rights (only) of Australian Style Investments.
(iii) On 21 April 2009 Macquarie Group Limited offered BCSCA unitholders with up to 50,000 of holdings an opportunity to exit the register by 5pm 4 May 2009 without meeting $2 liabilities.

David Barrow, mate you are just bombarding this thread with bull **** by omission. You know, but conveniently fail to explain that in relation to item:

(d)(i) Macquarie Group purchased the units to counter Bolton's attempt to wind up Brisconnections. Macquarie Group did not do this to protect its investment in Brisconnections, but rather to protect its more profitable position involved in financing the project.

Again, in point:
(d)(ii) Why dont you explain to the reader that the reason Leighton Holdings paid Bolton $4.5 million was purely to protect their position as constructor of the project.

Item (d)(iii) was just plain public relations damage control by Macquarie Group and at the same time cutting their losses.

 

[JAB_Charity]

Hello Macquack,

I believe that all the scenarios are instances (market signals) of value where there is a market price struck and securities or derivate rights of securities are exchanged for $cash for either an equity position in the future cashflows of the units or as you point out for some other strategic value.

Compare this to other corporate leviathans that were wiped out in recent times without any further market trades. Those leviathans were terminal and so there were no trades. By contrast, BrisCon in my view is a going concern, fully underwritten in its financing with the interest on the debt hedged to at least 80% and the construction of the massive infrastructure project on track according to BrisCon Management.

So taking a position in BrisCon before and during the listed scenarios and now presently has value in my opinion.

Regards, David

 

[Sainter]

Given the last trading price of BCSCB I fear the market feels it has further to fall once the final $1 installment is paid. If they drop below 70c I might think of doing some research on them with a view to buy at some stage. I most certainly will wait and watch for now, though.

 

[riverred]

Hi David, I hold a positive view on BCS' mid to long term value. For this reason I bought in at 10c after the second installment fiasco was settled. So, now I'm a shareholder. But I don't regret paying 10c higher than the 0.1c had I bought a mere month later. In the mid to long term investment perspective, what's 10c when the sp target is the par value? Who could have known with certainty about the sp drop anyway? It's only easy with hindsight.

Just two questions for you:
- Why didn't you place a bid for 5-10c just before BCSCB went into trading suspension? You'd have bought up all those shares on offer then. And it'd have saved you the hassle and costs of this latest buying process.
- Why would anyone think that those investors who didn't sell their holdings at 0.1 c before trading suspension and who now have to pay the final $1 installment would want to sell at less than $1.001? Some suggest that the sp may fall to 70c. Why would investors choose to suffer a greater but preventable loss just days after trading suspension?

Need to remember that more than 90% of the shares are already locked up in institutional hands; and that MacQ and Deutch hold a combined of 80%. Some think that the big share dump will happen soon. Others believe that a takeover and restructure is more likely. Doesn't make sense to me that MacQ and Deutch will do a big dump at less than $2 because they will make multi-$M losses then. Highly profitable and shrewd instos don't operate that way. If a restructure is on the cards, then the offer price will have to be reasonable, aka $2 or even $3, perhaps. Surely these instos do not want another bad public image/reputation arising from BCS shares.

 

[JAB_Charity]

Hello riverred

Just two questions for you:
- Why didn't you place a bid for 5-10c just before BCSCB went into trading suspension? You'd have bought up all those shares on offer then. And it'd have saved you the hassle and costs of this latest buying process.

I and my associated companies were pleased to acquire 1.2m units. There were only 8.4m units in circulation that were not amassed in the 98% held by the big four institutional investors of Macquarie (45.5%) + Deutche (35.4%) + QIC (10.0%) + Capital (7.0%) -- so the units were actually quite scarce on the sell-side and I'm not sure that bids up to 10c would have made much difference on what could have been acquired. Quite simply, holders do value these units so they have continued to hold them. As you say was the case with you.

- Why would anyone think that those investors who didn't sell their holdings at 0.1 c before trading suspension and who now have to pay the final $1 installment would want to sell at less than $1.001? Some suggest that the sp may fall to 70c. Why would investors choose to suffer a greater but preventable loss just days after trading suspension?

Yes -- there were over 1.7m bids on the first day of BCS trading, most of which were less than $1. Not surprisingly, there were no trades at that level, only trade at $1.30 later in the day. Those who are holding BrisCon will most likely sell only above $1 as you say.

I'm not sure where a price of 70c might be coming from but I note that on the assumptions set out by BrisCon Management on 8 April 2009 in a Revised Base Case Financial Model that discount rates of between 15% and 25% gave unit valuations in the range $1.10 to $3.05. BrisCon also made further reference to broker reports with an average fully paid target price of between $1.28 and $1.80. See "Valuations" section in this link:

http://www.settlemate.net.au/PrivateAuction/tabid/60/Default.aspx


I am now targeting Sophisticated and Professional Investors as defined under section 708 of the Corporations Act:

http://www.comlaw.gov.au/ComLaw/Management.nsf/current/bytitle/3B11B1FDA7FE3EF3CA256F7100071C8F

Have a nice aggregated bundle of 1,200,000 units that represents 0.3% ownership of BrisCon – a slice to sit alongside QIC and 3 other big institutions on the BrisCon register.

Note that QIC has already paid $2 per unit for its 10% BrisCon holding, which equates to $77.6m, and QIC will lift this to $116.4m if it pays the 29 Jan 2010 $1 final instalment which seems likely.

So if QIC will pay $3 for BrisCon all up, how much will other Sophisticated and Professional Investors pay?

Will see what expressions of interests arise at a reserve price of $1.20 per unit at a BrisCon Private Auction alternative:

http://www.settlemate.net.au/PrivateAuction/tabid/60/Default.aspx


Regards, David

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DISCLOSURE

I, David Barrow and my sole-director companies SettleMate Pty Ltd and DefaMate Pty Ltd are holding 1,200,000 BrisCon units

The Julie Anne Barrow Charitable Trust, of which I am a director of the corporate trustee for this charity, now only holds 20 BrisConnections Stapled units -- whereas the unit holdings as at 29 April 2009 were 5,609,666

 

[riverred]

Thanks, David, for your detailled response and links. Much appreciated.

Just one last question. What are your thoughts regarding the speculation that MacQ & Deutch will not be content with merely holding 80% BCS for the mid to long term, with no div receivable in the near term? It would be quite uncharacteristic for them to allow so much funds to remain idle in this manner.

Thanks again and all the best.

 

[JAB_Charity]

Just one last question. What are your thoughts regarding the speculation that MacQ & Deutch will not be content with merely holding 80% BCS for the mid to long term, with no div receivable in the near term? It would be quite uncharacteristic for them to allow so much funds to remain idle in this manner.

Interesting question. Speculating in reply, I'd say that in the circumstances Macquarie & Deutsche:

(1) Will pay the final $1 instalment on 29 Jan 2010;

(2) Likely bid $1 or more for defaulted units at any public auction; and

(3) If there is any shortfall from sale of units at auction, will pay that shortfall as underwriters on or around 17 March 2010.

Beyond this, Macquarie & Deutsche know that the project is on track according to BrisCon Management and that revenues from the 45 year concession are expected to flow from opening of the tollway mid-2012, so that looks to be a significant cashflow starting soon enough and for the longterm. Given this, hold the units? And/or sell off to other institutions for a fair price given the fundamentals.

Regards, David

 

[JAB_Charity]

In response to BrisCon ASX Announcement today http://www.asx.com.au/asxpdf/20100201/pdf/31ngwwhd51h9qd.pdf

• David C. Barrow and companies associated with Mr Barrow (SettleMate Pty Ltd and DefaMate Pty Ltd) hold 1.2m BrisCon BCSCB units (0.3% of total on issue)

• With 99.4% of BCSCB units paying the 29 January 2010 $1 final instalment this leaves 0.6% declining to pay; 50% of these are held by David C. Barrow and assoc companies

Alternative for Sophisticated Investors looking to get a slice of BrisConnections

Private Auction: http://www.settlemate.net.au/PrivateAuction/tabid/60/Default.aspx


Inconsistency: Underwriting Arrangement

There is a fundamental inconsistency between the underwriting arrangement for the final instalment of the BrisConnections units and any claims for a with-recourse liability against unitholders who decline to pay the final instalment.

An issue along these lines was raised in the courts in 2009, but not as yet tested, for the following matters:

• VSC 7066/09 FAUSTO IERVESE $500,000

• VSC 7067/09 ANNE LOUISE NEWTON $300,000

• VSC 7091/09 ROBERT GREGORY STEPHENSON $700,000

• VSC 7093/09 SCOTT NORTH-COOMBES $1,000,000

• VSC 7096/09 JOE CHEEWA CHANG $500,000

• VSC 7377/09 YSCA NOMINEES PTY LTD <YSCA SUPER FUND A/C> $100,000

• VSC 8392/09 BHAGWAAN ENTERPRISES PTY LTD $500,000

• QSC 7295/09 DALEWON PTY LTD $350,000

Note: VSC = Victorian Supreme Court; QSC = Queensland Supreme Court


Following in the footsteps of the causes of actions pleaded in these previous cases -- in our view, either the unitholder pays the final instalment and there is no underwriter payment; or the underwriter pays the final instalment and there is no liability for the unitholder.

It's as simple as that. And makes the collection of debts said to be owing unenforceable by BrisCon (as it always was for the second instalment as well).


Further, any amount that an underwriter pays on or around 17 March 2010 is not a 'Loan' (it is full payment) – and in any event there will be no liability for any party on or around 29 July 2010 (6 months after the infamous ‘best endeavours’ imperative expires).

Regards, David

 

[JAB_Charity]

Some Recent Developments:


8 March 2010 Public Auction in Brisbane of 1.285m "defaulted units". There are no bids even at the $1 reserve price:

http://asx.com.au/asxpdf/20100308/pdf/31p4gs624kxks0.pdf

Note: BCS units trade at $1.15 (low volume) on the ASX that same day


17 March 2010 Underwriters Macquarie and Deutsche pay $1.275m Third and Final Instalment Shortfall on defaulted units

http://asx.com.au/asxpdf/20100317/pdf/31pb6g0b1x79r0.pdf


1.2m of the 1.285m defaulted units are owned by myself (David C. Barrow) and my associated companies (SettleMate Pty Ltd and DefaMate Pty Ltd).

See coverage in 18 March 2010 Sydney Morning Herald:

http://www.smh.com.au/opinion/accountant-takes-fight-to-briscon-20100317-qfra.html


Interested people may like to Help Draft Legal Pleadings against BrisConnections. A WIKI has been set up for this purpose:

http://www.settlemate.net.au/LegalMuse/tabid/68/Default.aspx

http://thebcon.wikia.com


Possible Causes of Legal Action:

(1) With Underwriters having paid all the outstanding Instalments on 17 June 2009 and 17 March 2010 there is actually no money owed by unitholders

(2) Breach of Good Faith in Conduct of 8 March 2010 Public Auction

(3) Culture of Bad Faith Generally

(4) Misleading and Deceptive Conduct on how a Public Auction would be conducted

(5) Fraud on the Power conduct that does not protect the best interests of unitholders


Regards, David

Disclosure on ownership of defaulted units: 788,354 David C. Barrow; 206,970 SettleMate Pty Ltd; 202,970 DefaMate Pty Ltd

 

[drsmith]

David,

Can you actually make anything from this now or is it just a question of holding the line and trying to prevent a legal settlement against you ?

In relation to the latter why do you have so many units in your own name ?