Inevitable Octaviar………formerly MFS….collapse won’t ruin Arctic deal
The inevitable collapse of Octaviar, the property and funds manager formerly known as MFS Ltd, would not ruin a deal by James Packer’s private equity firm to rescue an ailing Octaviar satellite.
Craig Carracher, chief executive of Hong Kong-based group Arctic Capital, said he was watching Octaviar’s precarious financial position closely, but his recapitalisation plans for spin-off Living and Leisure Australia remained on track.
“Even if (Octaviar) falls over, any receiver, administrator or liquidator should see that selling the asset, or removing the asset out of the group, doesn’t cause any disadvantage to their creditors in any shape or form,” he said.
Last month Arctic unveiled a recapitalisation plan for Living and Leisure, which owns two Victorian ski fields, Melbourne Aquarium, a tree-top walkway and aquariums in Asia.
The rescue package is to include the restructure of $70 million debt, a change of Living and Leisure’s operational structure and a rights issue to raise up to $100 million for its balance sheet.
Arctic, a subsidiary of Mr Packer’s private company, Consolidated Press Holdings, has almost completed due diligence, but there are growing concerns that the crumbling Octaviar group could bring down the Living and Leisure deal with it.
Octaviar is on the verge of collapse after Public Trustee of Queensland, an arm of the Queensland Government, last week applied to wind up the group and some of its satellites over the payment of $351 million. That case will go before the courts next month.
“I don’t see the Octaviar risk as a currently material one,” said Mr Carracher. “But it could be a ‘binary’ one, in that if the responsible entity (for Living and Leisure) is trapped inside Octaviar then it’s very difficult for the company to feel comfortable that it has removed itself from the Octaviar group.”
He said if Octaviar were to fall into the hands of receivers, they would recognise the value of the Arctic deal.
“We think this transaction is good for Octaviar and if it’s good for Octaviar then sensibly it would be something that even if the group went in some sort of third-party administration then the administrator would still want to complete the transaction,” he said.
Mr Carracher said the offer document for the rights issue should be lodged in late June, with recapitalisation to be completed by July 31.
He said it was likely between $90 million and $100 million would be raised.
Living and Leisure shares yesterday rose 1.2¢ to 5¢.
by The Mole
John Alwyn-Jones
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