Perpetual Moves In On Troubled Elderslie

The Age

Thursday July 3, 2008

Clancy Yeates

AFTER losing a battle to be given more time to secure much-needed cash, the $200million Elderslie Finance Corporation is in receivership, amid evidence the company could no longer pay investors.

Its trustee, Perpetual, yesterday appointed a receiver after the Federal Court ruled in Perpetual's favour.

Elderslie was until recently chaired by former federal Liberal leader John Hewson, but he and two other directors resigned in recent months amid reports the company was on the brink of collapse.

After several multimillion-dollar rescue attempts fell through recently, Perpetual said yesterday it had appointed receivers from PricewaterhouseCoopers. Bendigo and Adelaide Bank also appointed receivers over assets exposed to the troubled company.

"We explored a series of options with EFC before making the decision to appoint a receiver," Perpetual's general manager of trust and fund services, Chris Green, said in a statement.

"Unfortunately, a sale involving a significant cash injection did not eventuate and we ultimately had no option but to take enforcement action to protect the assets available to debenture holders against any further erosion."

Perpetual said secured debentures affected by the receivership they had initiated were valued at $150 million, representing about 3330 on issue.

Several Elderslie investors were unable to access debentures that matured last month and in May.

More than $38 million in debentures were due for redemption between July and September, the court heard.

The court also heard of "circular" arrangements between Elderslie and its parent, Hotel Nominees, of which Elderslie director Peter George is the sole director.

One of Elderslie's assets was a $67 million related-party loan to Hotel Nominees, which was at risk and could take Elderslie's balance sheet into the red, the court heard.

In the absence of a funding injection, Elderslie was losing money since the hearing was adjourned two weeks ago, the court also heard.

Elderslie had put forward several failed rescue plans, including a bid from Elderslie director Nigel Purves to inject about $10 million, and a separate $15 million proposal.

Receivers said they would give further information to debenture holders soon. Dr Hewson was unavailable for comment.

KEY POINTS

Receivers have been appointed to Elderslie Finance Corporation.

About $150 million of secured debentures are involved, representing 3300 on issue.

© 2008 The Age

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