May 5, 2008

Briefly Business: Octaviar, Allco, Microsoft vs Yahoo

Octaviar boss jumps from role ... Allco struggles to find Mobius buyer ... BG wants free gas ... After deal dies, Yahoo weighs its next move.

Octaviar boss jumps from role. After several months struggling to keep the company, once known as MFS afloat, 32-year old CEO Craig White has "resigned" as boss of the suspended funds manager. The company noted that “the board unanimously agreed that the appointment of Chris Scott and Chris Chapman as executive directors was the most appropriate way forward. It will ensure that the company remains entirely focussed on the best interests of creditors, shareholders and all other stakeholders.” The move isn’t a complete shock. First, it was somewhat surprising that White remained CEO given that he was deputy CEO during a time where the company managed to destroy almost one billion of shareholder wealth. Moreover, with the recent resignation of former MFS directors, Geoff Williams and Michael Hiscock, interests associated with Scott now control the Octaviar board. It was, however, most interesting to note Octaviar’s choice of words, with the company stating that Chris Scott would represent the interests of creditors and then shareholders. Australian case law provides that a company only owes a duty to its creditors when it is insolvent (or where there is a “real risk of insolvency”) – otherwise, a company’s primary duty is owed to shareholders. Was it an unfortunate choice of words by Octaviar, or are they all but conceding that the company is insolvent? -- Adam Schwab

Allco struggles to find Mobius buyer. While former executive chairman David Coe relaxes in his $30 million harbour-front mansion, things don’t look quite as pretty in the Allco boardroom, with the company expected to shortly announce a $1.5 billion loss. Meanwhile, Allco is desperately trying to reduce its exposure to failed lender, Mobius. While the Rubicon fiasco represents Allco’s most morally indefensible transaction, the purchase of the balance of the Mobius mortgage business in 2006 remains the height of Allco’s stupidity. Mobius has a $1.2 billion loan book, of which, it is believed 22% of residential mortgage backed securities it has issued are in arrears. Mobius’ trouble began back in 2007 after it unwisely decided to purchase poorly performing loans from HLP Mortgage Co, which went into administration last February and Double Bay law firm R. L. Kremnizer. Back in October 2006, Allco paid $1.3 million to Wizard to increase its stake in Mobius to 80%, valuing the business at $3.25 million. With Mobius losing $31 million in the December 2007 half, one suspects Wizard’s Mark Bouris came out ahead in that deal. Today, the AFR reported that Allco is pushing ahead with its search to find a third party to manage Mobius while it tries to sell the business. Good luck. -- Adam Schwab

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3 thoughts on “Briefly Business: Octaviar, Allco, Microsoft vs Yahoo

  1. tracey

    we have lost money with Octaviar. what do you do? who do you talk to. obviously our finance adviser cant help, he got us into this mess. as im in victoria, we have seen nor heard nothing in the media. we have only learnt of this mess from the letters they sent us, and it was only when i rang our fiance man did i fully understand the extent of it all. we were told our money was safe from this sort of drama. guess thats what happens when you trust in “trained” business men.

  2. db

    asx does not “supervise” itself. asic supervises asx. actually, if an odd price movement were detected, it would have picked up been by asx’s surveillance area. they would then send it to asic to do with as asic deemed necessary.

  3. The Kid From Bondi

    “While former executive chairman David Coe relaxes in his $30 million harbour-front mansion” the company is expected to shortly announce a $1.5 billion loss.

    I rest my case!

    PS And what is the status of the Coe super yacht currently under construction? Will he be low key and moor it in front of his little mate’s missus’ $30 mil joint? I am sure that Ruprecht won’t mind.

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