Maybe we now need the "ANZ Effect". Instead of:
"A butterfly flapping its wings in South America can affect the weather in Central Park"
we should have:
"ANZ mis-management in January can cause a meltdown of the Australian financial system in April"
It all started with Tricom:
Earlier this year a group of Allco executive signed over some stock to Tricom and drew down a $60 million loan. Tricom then lent this stock to a hedge fund through ANZ Nominees which duly shorted Allco Finance Group, thereby sending the shares south and triggering the margin call.
Tricom then outraged the Allco executives by selling 21.9 million shares to Allco founder John Kinghorn without the required five days notice and then ANZ failed to deliver the stock back to Tricom in time for settlement.
Alan Kohler wrote the following on Business Spectator:
"So while one part of ANZ was failing to deliver stock for settlement, another part was refusing to cough up the overdraft to cover the shortfall with cash. Separately neither action by the bank was particularly unusual or out of line; together they were utterly disastrous."
This incident then forced Tricom to unwind it's margin book, creating downward pressure on the markets which didn't help other margin lending providers. Apparently at this point Opes Prime took on some of the Tricom loan book. It's only speculation but I wouldn't think the accounts/shares taken on were at the higher end of the quality spectrum. This in itself didn't do the damage but coupled with what happened next proved fatal.
It was reported in the weekend edition of the AFR (April13-14) that Norm Seckold held a $100 million account with Opes and after reading about what happened at Tricom then tried to pull his money out of Opes. Because he had such a low LVR on his account, it being withdrawn would put pressure on Opes Primes overall LVR with the ANZ. When ANZ heard about this they went in for a closer look and the discovery of the games Emini was playing trying to save favoured clients accounts.
ANZ then put Opes to the sword which sent investors scurrying to check their agreements with other margin lenders. Meanwhile ANZ and Merrills started selling stock into a depressed market making things even worse.
The Opes situation caused customers of Lift capital to start pulling out in droves which forced it to go under. It now looks like Chimaera could be next. This inevitably leads to even more selling of shares by the banks which forces prices down even more.
Now we have investors spooked and running for the doors, the Australian regulators looking like the keystone cops, the Melbourne underworld getting more involved everyday and the entire Australian financial system the becoming a laughing stock.
So where does it end?
I wonder. If the ANZ could have returned the Allco shares back to Tricom in time to settle could some of this been averted?
Monday, April 14, 2008
Tuesday, April 8, 2008
30c in the dollar
So while Tricom investors were being bailed out by ANZ, Opes clients can expect around 30cents in the dollar.
I can't quite work out the maths...it was reported ANZ and others were owed $1050 million...clients had a reported $500 million in equity and there is currently $1589 million with ANZ et el. In addition there was a reported $400 million in other related companies of Opes...so why the low estimate? According to those figures there should be more than enough to pay back to clients.
So my offer to ANZ is this.
You will pay me 100cents in the dollar.
Otherwise you will be dragged through the courts for two years, forced to pay all legal costs and then be required to buy my shares back on market with supply locked down so tight you be paying 3-4 times over the odds. Sound fair?
I can't quite work out the maths...it was reported ANZ and others were owed $1050 million...clients had a reported $500 million in equity and there is currently $1589 million with ANZ et el. In addition there was a reported $400 million in other related companies of Opes...so why the low estimate? According to those figures there should be more than enough to pay back to clients.
So my offer to ANZ is this.
You will pay me 100cents in the dollar.
Otherwise you will be dragged through the courts for two years, forced to pay all legal costs and then be required to buy my shares back on market with supply locked down so tight you be paying 3-4 times over the odds. Sound fair?
Mick Gatto and Opes
"I prefer the personal touch you only get with hired goons." - Montgomery Burns
Do you realise how laughable this situation is? Here we have ASIC and the ASX floundering around doing absolutely nothing. Meanwhile Mick Gatto is on a plane to Singapore now trying to get things done! Has the world gone mad?
ASIC/ASX, you are the laughing stock of the entire world.
Alan Kohler has an interesting take on this development suggesting the connection to underworld figures may have been the reason why Laurie Emini took such a risk for his so called "friends". No it's fine to lend a mate a few dollars or shout him down the pub but to let him run up a $100 million plus debt that will ruin your company, career and send you to jail is something else. So why then? Maybe fear. But I think there was a healthy does of greed as well. It will come out shortly that Laurie and other directors were trading their own accounts through offshore companies and I suspect there is some relation to the "6 friends".
Do you realise how laughable this situation is? Here we have ASIC and the ASX floundering around doing absolutely nothing. Meanwhile Mick Gatto is on a plane to Singapore now trying to get things done! Has the world gone mad?
ASIC/ASX, you are the laughing stock of the entire world.
Alan Kohler has an interesting take on this development suggesting the connection to underworld figures may have been the reason why Laurie Emini took such a risk for his so called "friends". No it's fine to lend a mate a few dollars or shout him down the pub but to let him run up a $100 million plus debt that will ruin your company, career and send you to jail is something else. So why then? Maybe fear. But I think there was a healthy does of greed as well. It will come out shortly that Laurie and other directors were trading their own accounts through offshore companies and I suspect there is some relation to the "6 friends".
Tricom claw back Opes shares
Looks like the transfers by Tricom after accounts had been frozen on Friday that were supposed to be reversed are now going ahead. (see report)
WHAT THE HELL?
That is at least $70million worth of shares available to be sold off by the ANZ bank now not available. Why is Ferriers letting this happen? This needs to be clarified at the creditors meeting this afternoon.
ANZ are very heavily exposed to Tricom falling over and $70mill in lost assets might be the thing that would make them insolvent.
When receivers were appointed to Opes, ANZ claimed all assets. They therefore claimed the Tricom shares as well. That means that the only way Tricom can get it's shares back is via a deal with the ANZ. ANZ indirectly have both sides of the transaction. Is this fair to other Opes clients? Are Tricom being forced to pay market prices or are just being allowed to unwind their position which hasn;t been an option for other Opes clients.
To paraphrase John Kennedy...ASIC DO SOMETHING, DON'T THINK, DO...before it's too late.
WHAT THE HELL?
That is at least $70million worth of shares available to be sold off by the ANZ bank now not available. Why is Ferriers letting this happen? This needs to be clarified at the creditors meeting this afternoon.
ANZ are very heavily exposed to Tricom falling over and $70mill in lost assets might be the thing that would make them insolvent.
When receivers were appointed to Opes, ANZ claimed all assets. They therefore claimed the Tricom shares as well. That means that the only way Tricom can get it's shares back is via a deal with the ANZ. ANZ indirectly have both sides of the transaction. Is this fair to other Opes clients? Are Tricom being forced to pay market prices or are just being allowed to unwind their position which hasn;t been an option for other Opes clients.
To paraphrase John Kennedy...ASIC DO SOMETHING, DON'T THINK, DO...before it's too late.
What damage will this cause to ANZ?
Robert Gottliebsen posted a great article on Business Spectator today in regards to how ANZ might be affected by the fallout from the Opes Prime meltdown. To quote:
"If the ANZ suddenly encounters big unexpected losses (a risk in tightening times), then because of the effect of the Opes stench on public confidence, it will be vulnerable to a low cost control attempt."
I have always maintained that ANZ could have taken a more conciliatory approach in this matter and taken on the management of the Opes loan book themselves in the first few weeks. Then performed an orderly call in of all margin loans ans sell down of of accounts that were in default. It would have been the RIGHT thing to do and the CHEAPEST thing to do. The approach they have taken now will end up costing them years in the courts and irreparable damage to their reputation. Vote on the poll on the right to give your view.
"If the ANZ suddenly encounters big unexpected losses (a risk in tightening times), then because of the effect of the Opes stench on public confidence, it will be vulnerable to a low cost control attempt."
I have always maintained that ANZ could have taken a more conciliatory approach in this matter and taken on the management of the Opes loan book themselves in the first few weeks. Then performed an orderly call in of all margin loans ans sell down of of accounts that were in default. It would have been the RIGHT thing to do and the CHEAPEST thing to do. The approach they have taken now will end up costing them years in the courts and irreparable damage to their reputation. Vote on the poll on the right to give your view.
ANZ step up PR compaign
Over the last few days there seems to have been quite a few articles and stories being placed attempting to portray Opes investors as rich and reckless investors with connections to underworld figures. The latest being decribed in an article in The Age newspaper.
No doubt ANZ are heading to the courts for quite a few years and it helps sway public opinion if the general public don'y realise that a majority of clients in Opes were ordinary investors with families that have lost their life savings.
No doubt ANZ are heading to the courts for quite a few years and it helps sway public opinion if the general public don'y realise that a majority of clients in Opes were ordinary investors with families that have lost their life savings.
Saturday, April 5, 2008
Voting Rights - Another black hole
Over the next few years here will be many legal battles that over the Opes Prime client shareholdings and who actually owned them. Lets say the final verdict indicates that Opes owned the shares outright when clients lodged them with them. What will be the effect on the many hundreds of voting actions that clients particiated in? Will these votes then be open to legal challenges?
There are many companies where between 10-50% of the shares were being held in Opes accounts. I wonder if there was a close vote on a sensitive issue that would have went the other way if the "Opes" votes were ruled inelgibile due to the fact that the people making the votes didn't in fact own the shares.
There are many companies where between 10-50% of the shares were being held in Opes accounts. I wonder if there was a close vote on a sensitive issue that would have went the other way if the "Opes" votes were ruled inelgibile due to the fact that the people making the votes didn't in fact own the shares.
Thursday, April 3, 2008
Opes Clients getting their act together
Seems like some Opes Clients are now starting to get their act together and are beginning to get traction in the courts. The first is the injunction granted to Gindalbie in the NSW supreme court brought by Slater and Gordon. There is a second motion before the Victorian Supreme court on behalf a group of 4 Opes clients but strangely the court has decided to adjourn to next week - meanwhile the stock dumping goes on.
By this stage ANZ and Merrills have most likely sold off all the easy stuff and are now left with holdings that are going to much harder to move.
I'm sure going into this the banks and Merrills knew it would take a few days for clients to organise and engage legal help with firms not scared off by ANZ. Now things are starting to happen expect it to happen thick and fast.
By this stage ANZ and Merrills have most likely sold off all the easy stuff and are now left with holdings that are going to much harder to move.
I'm sure going into this the banks and Merrills knew it would take a few days for clients to organise and engage legal help with firms not scared off by ANZ. Now things are starting to happen expect it to happen thick and fast.
Wednesday, April 2, 2008
New Business Idea - The Opes Prime model
This is an open letter to all ANZ executives,
Dear Sirs,
The whole Opes Prime arrangement has given me an idea for a new business which I am hoping ANZ will fund. Essentially I am going to start up a carpark in Collins St, Melbourne located near all the hot shot lawf irms. Of course there will be the standard Terms and Conditions allcustomers who will want to park their cars in my carpark will have to sign, but not to worry it's fairly standard. However buried on page 12of the 32 page document will be a clause requiring you to hand over beneficial ownership of your motor vehicle while you have your carparked in my car park and I will actually not add that clause into the document until most people have signed up :)
That is of course to protect me, and most importantly my financier (hopefully ANZ) from customers defaulting on their $15 a day parking fees...or so I will lead them to believe. And to get a better deal I will pool of the collateral in one nice and easy package for ANZ so I can get a better deal from the bank (yippee for me!). But this is the best bit, and is why my business will be a winner - customers will beable drop off their old BMW M Series and drive away with a brand newFerrari 599! (on loan of course) Great isn't it! At the start however Iwill only offer this deal to my mates, who to to perfectly honest, aren't the best drivers, but you know....what's the worst that can happen?If by some bizarre stroke of misfortune someone writes off one of my loan cars I will immediately have to go into liquidation and unfortunately start selling all of the cars in the parking lot even though most of the customers were simply parking their cars there and not using my special loan cars. However my financier will probably be the one doing the selling as I will have gone to ground by then and they will have appointed receivers. But I'm sure they will be able to achieve fair value for the cars or have mates who will give them a couple of grand to take them off their hands. Gee I bet the customers will be pissed....but at least we won't be at risk.
So what do you think, are we in business? Of course I will not be able to contribute any capital myself as you....ahhh....sort of cleaned me out but you must have a few lazy 100 million lying around.
Yours Sincerly
Opes Prime Victim
Dear Sirs,
The whole Opes Prime arrangement has given me an idea for a new business which I am hoping ANZ will fund. Essentially I am going to start up a carpark in Collins St, Melbourne located near all the hot shot lawf irms. Of course there will be the standard Terms and Conditions allcustomers who will want to park their cars in my carpark will have to sign, but not to worry it's fairly standard. However buried on page 12of the 32 page document will be a clause requiring you to hand over beneficial ownership of your motor vehicle while you have your carparked in my car park and I will actually not add that clause into the document until most people have signed up :)
That is of course to protect me, and most importantly my financier (hopefully ANZ) from customers defaulting on their $15 a day parking fees...or so I will lead them to believe. And to get a better deal I will pool of the collateral in one nice and easy package for ANZ so I can get a better deal from the bank (yippee for me!). But this is the best bit, and is why my business will be a winner - customers will beable drop off their old BMW M Series and drive away with a brand newFerrari 599! (on loan of course) Great isn't it! At the start however Iwill only offer this deal to my mates, who to to perfectly honest, aren't the best drivers, but you know....what's the worst that can happen?If by some bizarre stroke of misfortune someone writes off one of my loan cars I will immediately have to go into liquidation and unfortunately start selling all of the cars in the parking lot even though most of the customers were simply parking their cars there and not using my special loan cars. However my financier will probably be the one doing the selling as I will have gone to ground by then and they will have appointed receivers. But I'm sure they will be able to achieve fair value for the cars or have mates who will give them a couple of grand to take them off their hands. Gee I bet the customers will be pissed....but at least we won't be at risk.
So what do you think, are we in business? Of course I will not be able to contribute any capital myself as you....ahhh....sort of cleaned me out but you must have a few lazy 100 million lying around.
Yours Sincerly
Opes Prime Victim
Tricom Crossings Reversed
Some (minor) good news for Opes clients in that the shares transferred out of Opes by ANZ controlled Tricom after accounts were frozen has been reversed. That means up to $200million of value has been restored to the Opes asset list. These special crossings were unwound at Tricoms request. Read into this what you will, but do you think they did it because they thought it was unfair and out of sympathy for Opes clients? This is getting laughable (then I remember my portfolio is gone). Surely ASIC/ASX must further investigate this matter. Did Tricom think they could get away with this...it seems pretyy desparate. It means that Tricom and by extention the ANZ bank are to some extent in the same boat as the (innocent) Opes clients, as unsecured investors. Will this now be enough to bring down Tricom?
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