opes test case could cut payout

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    Test case likely to cut into dividendFont Size: Decrease Increase Print Page: Print Richard Gluyas | April 11, 2008
    OPES Prime customers could get sharply lower dividends than the anticipated 30c in the dollar if a Federal Court test case brought by an aggrieved investor succeeds.

    Judge Ray Finkelstein yesterday fast-tracked to later this month a claim by Beconwood Securities that it still holds an interest in shares lodged with Opes as security for a $1.35million loan, and is entitled to damages or recovery of the stock.

    Beconwood started the adjourned hearing with an application to extend an injunction restraining secured Opes lender ANZ from selling the stock to help realise $650 million in loans to the collapsed broker.

    But Justice Finkelstein ordered lawyers for Opes's administrators to appear in court in the afternoon because he planned to move quickly to a full trial on the key issue of the interpretation of the broker's loan facilities.

    "There are (court) actions all over the place," the judge said. "The administrator has no idea what the position is and he needs to know so he can work out what to do with the administration."

    Beconwood principal Paul Choiselat has argued that he obtained a margin loan facility from Opes and retains an interest in the shares he pledged for the loan from the broker.

    ANZ, for its part, characterises the arrangement as securities lending, which gives the bank title to the Beconwood stock if Opes fell over.

    Mallesons Stephen Jaques partner Tony Troiani, representing Opes's administrators, told the Federal Court in the afternoon that the case could have an "enormous" impact on the administration.

    Administrator John Lindholm told an Opes creditors' meeting on Tuesday that they could expect a return of about 30c in the dollar from their investments. More was potentially available, depending on the extent of recovery from six problem accounts protected from margin calls that owe Opes a total of $128 million.

    The shadowy British Virgin Islands-registered company Riqueza is also a debtor to the tune of $101 million.

    If Beconwood succeeds in its claim against ANZ, it will achieve a return of 100c in the dollar.

    A source close to the administration said other, similar claims would also be expected, which could reduce the size of the pool available for distribution to other creditors.

    Beconwood lodged shares in three small media companies with Opes, including 1.6 million shares in digital messaging company Jumbuck, 10.9 million shares in internet media start-up Destra, and 115 million shares in digital marketing group Q, equivalent to a 13.6 per cent stake.

    Mr Choiselat, who is managing director of Jumbuck, says in an affidavit he is "ready, willing and able" to repay the $1.3 million margin lending facility in full in exchange for the return of the shares.

    ANZ retains only the shares in Q, having sold the other stock as part of its selldown.

    Mr Choiselat says in his affidavit that his interests will be severely prejudiced if the shares are sold by ANZ because it would jeopardise service agreements he has with all three companies.

    A proposed float of Beconwood would also be in doubt.

    Noting Q's current share price of 1.5c, Jonathan Beach QC, for ANZ, ridiculed any suggestion of an initial public offering for Beconwood. "He wants to put (the Q stake) in an IPO? He can't be serious," Mr Beach said.

    Justice Finkelstein ordered ANZ to file a defence to Beconwood's claim by Tuesday. He extended the injunction preventing ANZ from selling the Q shares until April 21, when the trial starts.

    Meanwhile, a travel ban on Opes director and co-founder Julian Smith has been extended until May 2.

    A hearing relating to the ban was scheduled for today in the Federal Court but the case was yesterday held over until May 2.

    Mr Smith was due to travel to Fiji last Sunday for a family holiday, but ASIC intervened to obtain a stop order.

    A supporting affidavit by senior investigator Richard Vandeloo said Mr Smith was suspected of having an interest in Opes accounts where there had been "double counting" of stock, withone account in deficit for $38million.

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