Cracks in MFS open wider
Scott Rochfort in a report in The Sydney Morning Herald says that the cracks in the MFS empire have continued to widen, amid growing suspicions that one of the stricken Gold Coast property group’s listed funds could be running out of cash.
MFS Living and Leisure’s chief executive, Marshall Vann, yesterday declined to respond to concerns his fund will struggle to repay or refinance an estimated $170 million of debt due to expire in March.
While the separately listed MFS Limited has been busy assuaging market concerns over its $155 million of short-term debt which it plans to repay with some asset sales, there has been silence from MFS Living and Leisure.
The company, whose shares were suspended from trading last week after falling 47 per cent in the previous two days, made its last major announcement last month when it secured a $25 million “equity line of credit” from the US financial group Cornell Capital.
The fund’s interests include Victoria’s Falls Creek and Mt Hotham ski resorts, a snowmaking business, a 600 metre tree-top walk in the Otway Ranges and the international aquarium group Oceanis, whose portfolio includes Melbourne Aquarium.
NAB has declined to comment on whether it will refinance the estimated $110 million of debt it has tied up with the fund.
“It’s a matter for the customer to comment on their banking arrangements, not us,” said an NAB spokesman, Brandon Phillips. Part of the funding provided by NAB related to MFS Living’s acquisition of Oceanis in 2006.
The separately run MFS Premium Income Fund also has an unsecured $60-odd million debt facility in the distressed fund, which it says it still plans to recoup by March 31.
“We’re very confident that that loan will be repaid before it matures,” said Guy Hutchings, the chief executive of MFS Investment Management, the manager of the income fund.
The loan outlined in MFS Living’s accounts was made via MFS Limited in the way of separate $25 million and $42 million facilities last year.
“We’re expecting full repayment of that before the 31st of March,” Mr Hutchings said.
The MFS Premium Income Fund, which has $770 million worth of investments by 11,000 unit holders under management, has deferred “redemptions” for up to 180 days. Mr Hutchings said the deferment only related to increased redemption requests and not problems with the group’s investments, some of which are tied up in MFS’s struggling funds, including Living and Leisure.
In a bid to appease his 11,000 unit holders who have seen their funds frozen for the next six months, Mr Hutchings said MFS Investment Management would not claim any management fees in the interim.
He reiterated that unit holders in the fund would get their money back, plus the returns originally promised.
A Report by The Mole from The Sydney Morning Herald
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