Octaviar – formerly MFS – could be on the brink of collapse
Media across Australia and globally are reporting on the news yesterday that Gold Coast finance and tourism group Octaviar, formerly MFS, acknowledging that it may collapse because of $838 million owed to six of its largest unsecured creditors.
Changing its name from MFS last month, Octaviar yesterday released the long-delayed half-year report, revealing that debt had been reduced by $1.125 billion since late December but also that they only have $203 million cash remains in the bank.
Octaviar said that it will have to “reach accommodation” with its biggest creditors, which include a trustee for listed note holders, Challenger Managed Investments, OPI Pacific Finance, National Australia Bank and the Australian Taxation Office.
They added, “The timing remains uncertain” and “There is material uncertainty as to the group continuing as a going concern”.
With share trading suspended in January, after MFS stock plunged nearly 70% in one day in reaction to a failed scheme to borrow $550 million to restructure the company’s debt, the now Octaviar gave no indication when that might be lifted and it is understood the ASX will not agree to a resumption of trading until the company’s future becomes clearer.
The trading halt was put in place in January.
The company has already written off $1 billion and had a fire sale of assets, including the $1.3 billion sale of two-thirds of its holding in the Stella Group, which includes the BreakFree hotel chain, Peppers resorts and Harvey World Travel and Travelscene American Express, with critics saying that the sale of Stella was significantly undervalued with Octaviar confirming yesterday that it lost $590 million on the deal.
More than 10,300 investors are also still suffering as a result of the freeze placed on redemptions of Octaviar’s $755 million Premium Income Fund.
A Breaking News Report by The Mole
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