Troubled Banker Seeks Fast $25m

The Age

Wednesday July 2, 2008

Danny John

THE Chimaera financial services group has approached three of its key backers, as well as other potential investors, seeking a cash injection of up to $25 million.

This follows the decision by ANZ to pull out of an equity-underpinning deal for more than twice that sum.

Stunned by the bank's decision to call off an investment of $55 million after it failed to clear ANZ's due diligence hurdles, Chimaera declared it was in no immediate financial difficulties as a result.

The company, which describes itself as a private merchant bank and operates in the controversial securities lending business that has caused ANZ major problems, said it had worked closely with its other financiers to ensure "there was no question" about its ongoing viability.

And while it disputed that it had ever needed the large amount proposed by ANZ in April as part of a bail-out package following the sudden plunge in share values, Chimaera did confirm that it needed about half that figure.

The company had previously committed itself as part of the ANZ deal to raising an extra $10million, taking the level of the new financial backing to $65million.

Chimaera said in a statement yesterday it would need substantially less, though it claimed that this position only emerged as a result of the due diligence carried out by ANZ.

"As a business, we will still seek to undertake a smaller capital raising in order to demonstrate ongoing market confidence in our risk management systems and to fund expansion," Chimaera said. "We are now in discussions with other interested investors ... in the meantime, Chimaera is open for business as usual."

The statement left the company and ANZ at odds over the earlier decision. This had suggested Chimaera was in desperate need of new funds to stay afloat, following similar problems experienced by other stock lending operations such as Opes Prime and Lift Capital.

The controversial links between ANZ and the collapsed broking business Opes Prime prompted a wide-ranging review of the bank's involvement in stock-lending by chief executive Michael Smith.

His report, due to be released next month, is expected to recommend that ANZ pull out of such arrangements - a conclusion that is believed to have been behind the bank's decision not to proceed with its Chimaera deal.

In the meantime, ANZ remains one of its lenders and ANZ's nominee accounts arm continues to act as a subcustodian for Chimera's Primebroker Securities business.

Expressing surprise at the bank's move, Chimaera's co-founder, Sal Catalano, said: "We are concerned about the perceptions created by the decision, and the way it was made and announced, rather than the decision itself."

© 2008 The Age

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