SOUTH Wharf DFO has been saved from receivership but debt still clouds the future of developer Austexx, which owns the discount outlet chain.
Trustees for Australian Competition and Consumer Commission chairman Graeme Samuel, an investor in Austexx, approved an agreement last night.
Mr Samuel's trustees, Andrew Kroger and Guy Jalland, had been holding back on agreeing to a bailout because they were seeking compensation for the propping up of projects in which Mr Samuel has no stake with assets in which he has invested.
But last night the trustees withdrew their objection after striking a confidential deal and the bulk of the rescue package was signed by all four banks, owed $450 million secured against the struggling South Wharf project.
National Australia Bank, St George, BOSI and Suncorp-Metway will provide finance to complete the stalled construction of South Wharf, which may then be sold.
"We are pleased that all banks, partners and directors have unanimously endorsed the senior management of Frank De Rango and I, and the strategy we have been on for six months to recapitalise these great assets," said chief executive Geoff Porz.
He declined to comment on Mr Samuel's concerns about the company's borrowings.
The deal frees Mr Porz to concentrate on dealing with the remainder of Austexx's debt of about $1 billion, which is believed to be hurting otherwise profitable shopping centres.
Company documents show Homebush, one of the chain's most successful centres, owes up to $200 million.
Mr Samuel has given a "limited guarantee" of Homebush's line of credit through family company Lyngrae, loan documents show.
It is believed Mr Samuel is not concerned by the guarantee, despite learning of it only yesterday, because the Homebush centre is worth far more than the loan.
He is believed to be livid about other loans worth hundreds of millions of dollars.
But his trustees are believed to be unlikely to sue because they feel there is little prospect of recovering his investment, worth $25 million to $30 million.
A lawsuit would be difficult because of his role as ACCC chairman.
Loan documents show Austexx borrowed up to $100 million in March, secured against the successful Essendon DFO in which Mr Samuel is an investor.
And a loan of up to $180 million drawn by South Wharf, where Mr Samuel is not an investor, is secured against the Spencer Street shopping centre in which he holds a stake. Because his affairs are handled by trustees to avoid conflicts of interest, Mr Samuel became aware of Austexx's debt problems only last month.
Two of his trustees, Mr Porz and union stalwart Bill Kelty, resigned about the same time. It is believed Mr Samuel no longer speaks to Mr Porz, who signed many of the loan papers.
Frequently Asked Questions about this Article…
What happened to South Wharf DFO and was it saved from receivership?
South Wharf DFO was saved from receivership after trustees withdrew their objection and a rescue package was signed. Four banks agreed to a senior finance package secured against the South Wharf project, enabling the stalled construction to be completed.
Which banks provided the rescue financing for South Wharf DFO?
National Australia Bank, St George, BOSI and Suncorp-Metway signed the bulk of the rescue package to provide finance to complete the South Wharf project.
How much finance was secured against the South Wharf project?
The banks signed a rescue package secured against the South Wharf project worth about $450 million to help complete construction.
How much debt does developer Austexx have and how might that affect investors?
Company figures show Austexx has about $1 billion of debt outstanding. That level of borrowing is reported to be weighing on otherwise profitable shopping centres owned by the group, which is a risk that everyday investors in related assets should monitor.
What involvement does Graeme Samuel have with Austexx and the Homebush centre?
Graeme Samuel, the ACCC chairman, is an investor in Austexx. Loan documents show he gave a 'limited guarantee' of the Homebush centre's line of credit through his family company Lyngrae; he is reported to be unconcerned about this guarantee because the Homebush centre is believed to be worth far more than the loan.
Which Austexx shopping centres are mentioned as being used as loan security?
The article notes several centres tied to Austexx borrowing: Homebush (reported as one of the chain's most successful centres owing up to $200 million), Essendon DFO (up to $100 million borrowed in March secured against it), and the Spencer Street shopping centre (against which a loan of up to $180 million related to South Wharf was secured).
Why did Graeme Samuel's trustees initially object to the bailout and what changed?
Mr Samuel's trustees, Andrew Kroger and Guy Jalland, initially held back on agreeing to the bailout because they were seeking compensation for the propping up of projects in which Mr Samuel had no stake. They later withdrew their objection after striking a confidential deal, allowing the banks' rescue package to proceed.
What are the likely next steps for Austexx management and investors after the rescue deal?
The finance deal frees Austexx chief executive Geoff Porz and senior management to focus on addressing the remainder of the company's roughly $1 billion debt. For the South Wharf project specifically, the banks will fund completion of construction and the asset may then be sold.
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