Receiver Steps In As Elderslie Loses Fight For Funds

Sydney Morning Herald

Thursday July 3, 2008

Clancy Yeates

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

Its trustee, Perpetual, yesterday appointed a receiver after the Federal Court ruled in its favour in legal action against the embattled company.

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

With several multimillion dollar rescue attempts falling through in recent weeks, Perpetual yesterday announced it had appointed receivers from PricewaterhouseCoopers, while Adelaide Bank has also appointed receivers over assets exposed to the troubled firm.

"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 it had initiated were valued at about $150 million, which accounted for 3,330 debentures on issue.

Several Elderslie investors had been unable to access debentures that had matured last month and in May, and more than $38 million in debentures will be due for redemption between July and September, the court heard.

In recent days 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 is a $67 million related party loan to Hotel Nominees, which is at risk and may take Elderslie's balance sheet into the red.

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

Elderslie had recently put forward several failed rescue plans.

Receivers said they would give further information to debenture holders in the next few days.

© 2008 Sydney Morning Herald

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