Angas Securities debenture holders vote in favour of debt equity deal
Investors in Angas Securities’ embattled $220 million debenture fund have agreed to take a $42 million hit in order to avoid the Adelaide investment firm being placed into receivership.
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- August 2016: Investors keep faith in Angas despite missed deadlines
- August 2017: Third time lucky for Angas as it keeps control of fund
- January 2019: Angas rules out extension as deadline nears
- February 2019: Angas investors to be offered equity in the company
Investors in Angas Securities’ embattled $220 million debenture fund have agreed to take a $42 million hit in order to avoid the Adelaide investment firm being placed into receivership.
For a third time in four years they voted in favour of changes to a long-standing repayment agreement, accepting a 70 per cent stake in the company in exchange for the termination of $94.4 million still owed to investors.
They will also receive proceeds from the sale of the debenture fund’s remaining assets as part of a new managed investment scheme.
More than 50 investors met at the Convention Centre to vote on the proposal, with 86.4 per cent of votes cast in favour of the deal. The proposal required a 75 per cent majority to pass.
Chris Madsen, 81, was disappointed with the outcome after voting against the proposal.
“They’ll continue trying to flog off these properties but what the proposal is, is that they keep any money they get from that to build up the capital in this new company,” he said.
“You’ve got to look at the track record - the track record’s not good. We’ve only got back a bit over 50 per cent of what we’d put in.
“They’re saying it will be several years before we see anything - I won’t be around to see any benefit.”
The “run-off” repayment agreement was first entered into in 2015, with deadline extensions approved by investors in 2016 and 2017.
Today’s meeting, chaired by former Supreme Court judge Bruce Debelle, came about after Angas could not meet the latest June 2019 deadline.
Angas executive chairman Andrew Luckhurst-Smith said the company would now turn its attention to growing its $75 million Angas Prime and Angas Direct managed investment schemes.
“Through having the slate being wiped clean absolutely, it means that I can concentrate entirely on growing the business and increasing prosperity, and not spend my time looking in the rear vision mirror,” he said.
“I told the investors today that I don't expect to pay dividends for two years because I think we need to rebuild the capital base, and also we need to get a trading history before we seek to list (the shares).
“We’ve done the best job we can and the results speak for themselves. I have no doubts, none at all, that if we’d lost any of the votes - one to four - the result for the investors would have been worse.”
An independent expert’s report prepared by Sumner Hall Associates values the investors’ new shares at $3.8 million to $5.9 million, while the remaining assets in the newly formed managed investment scheme are valued between $39.9 million and $46.3 million.
At best, that leaves debenture holders $42.2 million short of what they’re owed, recouping 80.1 cents in the dollar. The report suggests receivership would have left investors with a dividend of 67.3 to 70.7 cents in the dollar.
Andrew Tilley, who inherited Angas debentures as part of a deceased estate, said the outcome was in the best interests of investors.
“I didn’t see we had an option - because otherwise you’re voting to throw your money into the fire to the administrators,” he said.
“I don’t want to make the liquidators rich and that’s what would have happened - they get paid huge hourly fees and they get paid - we don’t.”
The deal also releases the company, its directors and its trustee from any potential claims in connection with the affairs of the company, including the implementation of the scheme. For Mr Madsen that was unacceptable.
“My wife and I bought these (debentures) with the idea that no way we’re going on the age pension,” he said.
“Now I’m 81, I’m on the old age pension and they still owe me $131,000. I didn’t want to let them off the hook.”
A Federal Court hearing will be held on May 17 to ratify the deal, which will come into effect on May 20.
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