Administrators Need $7m For Estate
The Age
Monday August 6, 2007
ADMINISTRATORS of failed Estate Property Group are to raise an extra $7 million to help finish some of its key projects and ensure the business does not run out of cash.
McGrath Nicol gained Federal Court approval and the backing of fellow administrators Pricewaterhouse Coopers, which is now in charge of the group's fund-raising arm, Australian Capital Reserve, to take out another loan with Commonwealth Bank. ACR has agreed to secure the new loan against properties in Newcastle and at Pokolbin in the Hunter Valley being developed by two EPG subsidiaries over which it has the main security. As part of the deal, CBA, which was one of the main lenders to EPG before that group collapsed and stands to recover all the debt owed to it, will be able to lay first claim over the proceeds to eventually flow from the finished projects. At the same time, the Federal Court granted an order that removed any personal liability from the administrators for the new loan, which the bank had required as part of the terms. The arrangement means the loan will be secured against the properties involved rather than exposing EPG's administrators to any claim against them personally if the bank has a need to call in the loan. The money will help to tide the group over until at least the end of this month, having faced a further problem with cash flow after going into administration at the end of May. McGrath Nicol and PricewaterhouseCoopers are selling off the first part of EPG's portfolio of 21 property assets in NSW and Victoria, from which they intend to pay back the banks owed $220 million. They also hope to raise at least 60? in the dollar for ACR's 7000 noteholders who contributed $330 million to the group. With the banks getting the money from the rent on some of EPG's properties to cover their interest payments, the group requires extra funding to pay a variety of extra costs and fees to help the administrators pull together a rescue plan to put to creditors next month. As well as helping to cover certain development charges, the $7 million will go towards paying the wages of remaining EPG staff (estimated to be $800,000), super contributions and tax ($1 million), insurance fees ($1 million), financing costs ($1 million), GST ($1 million) and legal charges. The administrators have until the end of this month to call a second meeting of creditors at which the trustee for the noteholders and the group's lenders will vote on a deed of company arrangement.The deed will govern the future sale of the properties and the return of the funds due to be raised.
© 2007 The Age
