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centro set to block raider...

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    Centro set to block raider
    Ben Butler
    February 28, 2008 12:00am

    DEBT-LADEN shopping centre empire Centro may be able to block property minnow Pelorus' attempt to seize a key investment syndicate.

    Pelorus yesterday formalised its bid for management of MCS 16, one of 10 syndicates it plans to take over.

    But Centro holds a near-blocking stake in that syndicate, and Pelorus must clear steep voting hurdles if it is to grab control of MCS 16 and the other nine syndicates.

    Pelorus, which yesterday announced a net profit of $3.2 million for the half year, is mounting the raid at the request of controversial New Zealand financial advisers Money Managers, which tipped its clients into the syndicates.

    Control of the MCS syndicates would boost the funds Pelorus controls from about $500 million to about $1.5 billion.

    For each fund, Pelorus requires 50 per cent of syndicate members to approve its proposal before it can replace Centro as responsible entity.

    Pelorus yesterday officially called a meeting of investors in MCS 16, a syndicate which owns the $36.9 million Toormina shopping centre in New South Wales.

    In a letter sent to investors yesterday, Pelorus said investors who did not vote would be "supporting Centro as the manager of your investment and, potentially, the retention of the existing high fee structure."

    Pelorus managing director Stuart Brown declined to rate his company's chances of seizing control of the MCS syndicates.

    "I reckon it's too early for us to put chances on it," he said.

    Mr Brown said Pelorus had no debt on its balance sheet and the $150 million owed by individual bankers could not be sheeted home to the company.

    "The bank has loaned to the project -- if the project goes tits up the bank's security is the project only," he said.

    He said a 2 dividend would be paid in scrip because the company needed liquidity to snap up distressed properties thrown up by the volatile market.

    "The more cash we've got in the business the more quickly we can respond to opportunities."

    Centro spokesman Jim Kelly said the company's Diversified Property Fund was considering how to use its 28 per cent share of MCS 16.

    "DPF's view is that it does have voting rights over its interest in MCS 16, which stands at 28 per cent of the fund," he said.

    If Pelorus succeeds in its bids to control the MCS syndicates, it has agreed to pay Money Managers a trailing commission.

    Earlier this month, New Zealand barrister James MacFarlane announced he was preparing a class action against Money Managers over $NZ457 million lost by 7000 investors in the company's First Step funds, closed in October 2006.

    In 2002, the New Zealand Securities Commission banned a mortgage investment scheme run by Money Managers because the company was not properly registered.


    Cheers, Pie :-)
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