Bank Throws $10m Lifeline To Help Keep Tricom Afloat
The Age
Wednesday April 9, 2008
ANZ has emerged as a white knight investor in Tricom Equities, investing about $10 million in the faltering Sydney stockbroker to ensure it stays afloat.
The role of ANZ in Tricom's rescue was revealed yesterday when the fund manager Babcock & Brown confirmed it had contributed an extra $5 million in equity to a rescue package, believed to be about $30 million. The move gives some comfort to Tricom, which has had its solvency questioned since it failed to settle trades on January 29 and brought the market to a screeching halt. But the rescue creates an unusual alliance between the blue-chip ANZ, the aggressive but badly shaken funds management business led by Babcock & Brown's chief executive, Phil Green, and a brokerage that was on the point of failure with practically no reputation. As part of the deal, both ANZ and Babcock & Brown have the option for each to buy up to 25% in Tricom over the next three years. The benefit to all involved in the rescue package is that Tricom stays alive as it tries to reduce its margin loan book from about $300 million while avoiding the carnage and uncertainty surrounding the demise of the Melbourne stockbroking business Opes Prime. It also means, reputationally, ANZ is dealing with only one collapsed broker, not two. It was revealed that ANZ, owed about $100 million, and Babcock & Brown, owed about $35 million, have agreed to a standstill on loan repayments from Tricom as the broker sorts out the mess. Suggestions of Tricom's rescue emerged after it was able to mysteriously buy back shares worth $70 million after Opes collapsed, in the process repaying $40 million to the bankers ANZ, Merrill Lynch and Dresdner Kleinwort, which stand behind Opes. ANZ has denied that Tricom was given any preferential treatment in buying back shares held by Opes. Sources within Tricom said Tricom had paid full price for the shares, suggesting a substantial loss on the transaction. The move puzzled market observers, given that Tricom had unsuccessfully sought a recapitalisation through a sale to Bell Financial Group for $1. Babcock & Brown's move to prop up Tricom appears to have been grounded in self-interest, with the initial $35 million loan revealed last month used to swap out shares owned by Babcock & Brown and other interests, which were effectively held by Tricom's banks. Tricom's survival also ensures holdings of about $70 million in Babcock & Brown satellites, held through margin loan accounts in Tricom, are not exposed to an Opes-style disruption. A senior Babcock & Brown executive, Trevor Loewensohn, said yesterday: "This in our view maximises our capacity to recover our (loan) exposure fully."
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