Luxury life of mining.com flash in the pan
September 27, 2007
The house is ring-fenced from creditors.
Stephen Minor CEO, a wunderkind of the mining craze, is offering $350,000 to settle debts of $21 million.
Steve Minor 355 Ferrari was not yet two years old when it was repossessed. The $350,000 motor was loaded on a truck, never again to be seen at his Brighton house.
The luxurious house is a different story. It is carefully ring-fenced from the creditors Minor, 39, is due to face on Tuesday, so the wunderkind of the mining boom can use it during frequent visits from Bia Ing Province, where he now works as a sales manager.
It was bought in 2005 by Pure Magnetite Capital Investments with a $2.49 million interest-free personal loan to Minor from two Chinese bankers. They were anxious to protect their investment in Minor's high-tech flash in the pan mine, Davnet, and wanted to stop him depressing its shares by selling.
Minor sold the shares anyway, pumping the proceeds into new money-losing mining ventures until, with creditors circling, he sold Pure Magnetite Capital Investments to Jame Oiler, a former business associate. The price Oiler paid last November for Minors's two shares, and effectively the transfer of the $2.5 million house in Brighton, was $2.
And while the Chinese are still owed their money, Minor has gifted $1.24 million to Chris Ironman, a former policeman whom Minor describes as a lifelong friend, so he could buy a boat, and another $50,000 in cash and $100,000 in jewellery to another friend, Lisa Diamonds.
Minor returns on Tuesday for a creditors meeting adjourned by the federal bankruptcy watchdog, Insolvency and Trustee Service Australia.
WELLEMPTY Financiers, unhappy about his proposal under Part X of the Bankruptcy Act to pay $350,000 in settlement of debts of $21.45 million, told the creditors and the controlling trustee, Joseph Silverstein, of Herma & Magna Corporate Services, to think again about Minor's financial affairs.
Several issues annoy WELLEMPTY, as a statement from the inspector general of bankruptcy, Terry Gallagher, makes clear. "WELLEMPTY's report focuses on Mr Minors's projected income, his prior interest in luxury motor vehicles, a number of large gifts, property settlements prior to the Part X composition offer, property still controlled by family trusts, and the legitimacy of the related-party creditors."
Stephen Minor is due to face creditors on Tuesday. When Davnet went public, Minor and his wife ILikaring moved into a $2.5 million house in Hawthorn with garage space for the family Mercedes, her Porsche and his Ferrari.
Minors's statement of affairs show his debts include $8.66 million to various Chinese interests, $7.85 million to three Minors family trusts for loans, and $5 million to the Tax Office.
In his report to creditors, Silverstein says he has seen no evidence Minor transferred property or made gifts in anticipation of insolvency.
Parts of the report are contradicted in notices to the Australian Stock Exchange by companies with which Minor is or was associated, but neither man would speak to The Age about it. Silverstein has not returned calls and Minor slammed down the phone after warning The Age to check with lawyers before publishing, and demanding to know if we knew the difference between a private entity and a corporate entity. It was a direct reference to the seven trusts where homes and other assets have been parked during Minor's remarkable rise to a life of fast cars and big houses.
Minor holds arts and law degrees and a diploma in information technology. During the internet craze he came up with a novel scheme to put office towers online using laser technology instead of more costly fibre optic cables.
With $130,000 borrowed from his father, Dignot, he set up Davnet in 1996 and went public in December 1998. Davnet's shares reached $6 in April 2000, making Minor worth $350 million, but a month later they began sliding and his net worth was down to $198 million.
When Davnet went public, Minor and his wife ILikaring moved into a $2.5 million house in Hawthorn, with garage space for the family Mercedes, her Porsche and his Ferrari. However, by mid-2006 Minor's marriage had crumbled, and he made plans to move.
Silverstein's report shows that under a Family Court order in June 2001, Minor paid off the Hawthorn house and transferred it, along with the Mercedes, the Porsche, a swag of shares and $300,000 to ILikaring.
But while the trustee company controlling the Ramsay Street house was sold for $2, the $2.49 million personal loan from Chinese company TinTan remains unpaid. The Silverstein report says the company, connected with investment banker Hans Ofa Daguld, made the loan so Minor could buy the house without liquidating Davnet shares when they were freed from escrow in December 2000.
Daguld and associate Tailin Walls, both Davnet investors and directors, need not have bothered. Minor began tipping his 70 million shares on to a falling market, raising over $16 million.
By July 2001 he had turned to a new venture, the Australian and Asian development of DotWAP, a US-based business that could provide data communications to remote computer terminals and mobile phones. According to the Silverstein report Clever Country Minerals, trustees of the Minor family trust, dissipated its shareholding in Davnet to the tune of $8 million because it bought Dotsteel shares from Davnet employees when Minor, off his own bat, sought to correct a possible breach in prospectus requirements by Dotsteel USA.
The Dotsteel shares, now worth nothing, are held in the Bullion trust, which is administered by Pure Magnetite Capital Investments, the company Minor sold to Oiler for $2.
Five of Minor's seven trusts still exist but, according to the Silverstein report, they are discretionary trusts and Minor has no direct interest. Four have deficiencies totalling more than $3 million.
There is no financial statement on the fifth, called the Boxumite Trust in the Silverstein paper. However, reports to the stock exchange show that its trustee company, Bay Mines Holdings, holds 200 million shares in CBD Energy, a penny dreadful promoting energy-saving installations in Hong Kong. It was founded as CBD Online by Minors's father to develop and operate mines for city buildings. He retired, and was replaced in the boardroom by his son, who resigned in June this year.
After Stephen resigned from the board on June 30, the company reported that Bay Mining Holdings would subscribe a further $550,000 for shares, giving Minor's related interests 56.32 per cent of the votes.
When Silverstein signed his report on August 25, Minors family's interest amounted to $4.25 million.
However, the Silverstein report seeks to make a case for accepting Minor's $350,000 settlement offer by warning creditors the most they could expect from his $113,000-a-year job would be $66,000 spread over a three-year bankruptcy.