Estate Administrators To Borrow $7m To Help Finish Projects
Sydney Morning Herald
Monday August 6, 2007
THE administrators of the 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 has gained the approval of the Federal Court and the backing of fellow administrators PricewaterhouseCoopers - which is now in charge of the group's fund-raising arm, Australian Capital Reserve - to take out a further loan with the 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 Estate subsidiaries over which it has the main security.As part of the deal, the Commonwealth, which was one of the main lenders to Estate before the group collapsed and stands to recover all the debt owed to it, will be able to lay first claim over the proceeds which will eventually flow from the finished projects.At the same time, the Federal Court granted an order that effectively 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 Estate'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 cash flow problem after going into administration at the end of May.McGrath Nicol and PwC are at present selling the first part of Estate's portfolio of 21 properties in NSW and Victoria, from which they intend to pay back the banks owed $220 million. They also hope to raise at least 60c in the dollar for ACR's 7000 note holders, who contributed $330 million to the group.With the banks getting the money from the rent on some of Estate'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 Estate staff (estimated to be $800,000), super contributions and tax ($1 million), insurance ($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 creditors' meeting at which the trustee for the note holders and the group's lenders will vote on a deed of company arrangement that will govern the sale of properties and the return of the funds raised.
© 2007 Sydney Morning Herald
