Mark Bouris’s Yellow Brick Road in performance bonus dispute

The mortgage broker led by Celebrity Apprentice host Mark Bouris has been taken to court by a former business partner.

Mark Bouris made his fortune selling Wizard Home Loans early last decade. Pic: Richard Gosling

The mortgage broking group led by Celebrity Apprentice Australia host Mark Bouris has been taken to court by a former business partner over a performance bonus dispute.

Yellow Brick Road announced today that it had been served with a suit over earn-out provisions in a deal struck with non-bank lender Resi Mortgage, which it took over in 2014 for a price of $36 million.

As part of the deal, an earn-out amount of up to $2.5 million in cash was agreed to be paid by Yellow Brick Road to the owners of Resi after a year of ownership if the business performed well.

Resi foundational shareholder Peter James was made the head of lending for the YBR-owned business once it was subsumed, but left the business in 2016 after a difference of opinion with the new parent group. At the centre of the departure was the earn-out dispute between Mr James and YBR over what was described as a perceived changed of conditions.

“The proceedings deal with the issue as to whether the earn-out conditions have been satisfied or not,” YBR company secretary Richard Shaw said. “Based on advice it has received to date, YBR is confident that its interpretation of the share sale agreement is correct, and that no earn-out amount is payable. YBR intends to defend the proceedings.”

Although it recently booked its maiden annual profit last financial year, Yellow Brick Road (YBR) has faced a number of hurdles. The group’s share price is currently languishing at under 10c a share — well below the 70c per share level it traded on in 2014.

Cornerstone investor Macquarie Group recently sold down its stake in Yellow Brick Road from 18.4 per cent to 7.8 per cent. Mercantile Investment Company increased its stake in the group from 9.1 per cent to 19.9 per cent.

Despite lofty ambitions for the mortgage lender and wealth manager, which made its stockmarket debut in 2011 with the aim to take on the banks, YBR shares have suffered. It’s a rout that’s wiped about $150 million in market capitalisation from the financial adviser and lender and left behind unhappy investors.

The group’s executive chairman, Mr Bouris, made his fortune selling Wizard Home Loans to GE Money early last decade.

Yellow Brick Road underwent a period of significant acquisition-led growth, buying out four separate companies in two years — Vow Financial, Resi Mortgage, Brightday and Loan Avenue.