MFS to reveal buyer today
A report in today’s Australian says that troubled Queensland finance company MFS is expected to emerge from a trading halt this morning and announce a proposed buyer for its Stella tourism and resorts business in an attempt to stave off collapse.
Analysts expect MFS to also reveal its true debt position, after shares in the company collapsed almost 70 per cent on Friday when MFS announced a demerger proposal that called for $550 million of equity funding.
“There was about $1.35 billion debt at June 30 but no one really knows what it is at this point in time,” one analyst said yesterday. “Based on the way the share price has fallen, there’s significant uncertainty and it’s time for MFS to clarify it.”
Today’s expected announcement comes as MFS, which has been in a trading halt since Monday, revealed that chairman Andrew Peacock, a former federal Opposition leader, was paid $250,000 a year to head the company.
MFS’s full-year accounts for the year to June 2007 are ambiguous about how much Mr Peacock is paid as chairman.
MFS called for the trading halt on Monday morning – the second in less than a week – and stated it was considering proposals received from “a number of parties” on Sunday night to buy a “majority interest” in Stella.
Private equity firm CVC Asia Pacific is believed to be one of those parties running a ruler over MFS’s Stella assets after it conducted due diligence on the assets last year but did not buy the group.
MFS on Friday announced plans to split Stella – which includes travel agency Harvey World Travel and management rights to hotel groups such as Outrigger resorts – from its financial services arm.
The move was viewed by the market as an attempt by MFS, which has long been criticised as having poor transparency, to use the funding play to cover debt problems, and MFS shares collapsed from $3.19 to 99c, where they have remained under the trading halt.
A report by The Mole from The Australian
John Alwyn-Jones
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