Most Opes clients continue to go backwards
- Leonie Wood
- August 19, 2008
FIVE months after Opes Prime Stockbroking collapsed owing share investors about $520 million, the vast majority of its clients appear to be worse off.
Calculations handed to the Federal Court yesterday show that of 464 client portfolios analysed by Opes Prime's administrators in recent days, about 70% have dropped in value since March 27, when the company sank into administration.
The clients' positions have deteriorated because shares they deposited with Opes Prime — in most cases, as collateral for loans to buy more shares — have continued to slide.
The clients remain exposed to share price fluctuations even though most of the shares, valued at $1.6 billion, were seized and sold by Opes Prime's financiers, ANZ and Merrill Lynch, which exercised their rights under share-lending contracts with Opes.
One client who was owed $24.7 million at March is entitled to claim only $2.4 million, based on share prices measured on August 16, because the shares underpinning that person's portfolio had plunged.
Another client owed $1 million in March has been flipped into the role of debtor and now owes Opes $174,546.
Others have swung from being net debtors to net creditors and back to debtors, while about 100 are entitled to claim more from Opes Prime than when the debacle began.
Only a few dozen Opes Prime clients have issued the firm with a notice of default, an event that freezes the value of their debt.
Opes Prime's administrators, John Lindholm and Adrian Brown of Ferrier Hodgson, yesterday asked Justice Ray Finkelstein to determine exactly which day they should draw a line through Opes' books to determine how much is owed.
It is a crucial question because the value of a creditor's vote at a meeting is directly proportional to the amount he or she is owed. When creditors meet again, most likely late next month, the administrators are expected to ask for the company to be liquidated.
Under the Corporations Act, the value of debts is determined the minute an administrator is appointed, but the Payments Systems and Netting Act of 1998, which covers the settlement of transactions in financial markets, appears to override the Corporations Act.
The Netting Act refers creditors and debtors back to their contracts to identify certain issues such as events of default or rule-off dates. In an earlier judgement this year, Justice Finkelstein ruled that, for the purposes of interpreting Opes' contracts, the appointment of an administrator was not the same as appointing a liquidator.
But counsel representing the administrators, ANZ and two sets of Opes creditors all argued yesterday that Opes' date of administration, March 27, should be the rule-off date — not a future date when a liquidator takes over.
They are concerned that if the default date is when Opes goes into liquidation, there is a big risk that investors might try to manipulate share prices to boost their vote in a creditors meeting.
http://business.theage.com.au/busine...0818-3xpj.html
Tricom lives.........for now
As an interesting diversion, the greatest mystery in modern-day Australian banking remains unsolved. That is the relationship between stockbroker Tricom, Babcock & Brown and ANZ.
You have to hand it to Tricom chief Lance Rosenberg, whose survival efforts make Lazarus look like a quitter. But why is it that - and ANZ still had nothing to say on this matter yesterday, having claimed to have cleaned up its stock lending mess last month - Tricom is still alive?
Tricom had assisted B&B in numerous ways during the halcyon days, including providing B&B executives and staff margin loans against their various B&B stable holdings.
It also provided substantial assistance to B&B in its takeover of Alinta by offering clients margin loans (believed to be non-recourse) on their Alinta stock provided they accepted the B&B terms.
These terms are part of the reason that Tricom margin lending ended up with so much of the B&B satellites in the margin lending account
While B&B flirts with death, ANZ has apparently funded former executive and head of B&B Capital, Rob Topfer, into a recapitalisation of Tricom. The irony is that B&B had closed down its corporate finance business as part of its recent restructuring but now appears to have set up Tricom as a corporate finance shop, thanks to Topfer and ANZ.
It seems B&B, Babcock Communities and Babcock Capital may pay Tricom to unwind the Babcock deals for which Topfer was originally responsible. Why didn't they just keep him on?
Will there be a fee rebate for savaged shareholders of B&B, BCM and BBC for unwinding these deals?
Nice work by Rosenberg and Topfer. There is still $80 million in the Tricom margin lending book that needs to be unwound.
But the big question remains, what is ANZ hiding? Does it relate to the failure to deliver Allco stock in January when Tricom blew up? The claw-back of stock from the dying Opes Prime perhaps? A deal arising from the shift of part of Tricom's loan book to Opes in February?
Who knows, apart from Rosenberg and ANZ? Still, Lehman might be gone but Tricom still lives!
http://business.smh.com.au/business/...0917-4ijg.html