Great Southern’s banking syndicate has rejected any hopes of restructuring the agribusiness investment scheme company by calling in receivers to take over the business.
According to a report in the Sydney Morning Herald, the company’s lead bankers – ANZ Banking Group, Commonwealth Bank of Australia, BankWest and Japanese bank Mizuho – refused a request for $35 million that would allowed the company to continue with its proposal to sell $200 million worth of assts.
But the banks rejected the proposal on the grounds it would have added to Great Southern’s existing debts and the company was unlikely to survive as a going concern.
It has been reported that the four banks are owed $376 million, with ANZ said to be owed $220 million.
Receivers McGrathNicol have now taken control of Great Southern and a number of its subsidiaries, and have the difficult task of assessing the state of all of Great Southern’s managed investment schemes, with a view to deciding how best to recover funds for creditors.
“This is a complex matter, and we expect the review process to take some time,” McGrathNicol partner Simon Read says.
“While we appreciate this is a difficult time for all stakeholders, we are placing a high priority on keeping investors, staff and other stakeholders updated with developments as we progress.”
Meanwhile, anger among investors is growing after it was revealed that Great Southern used a network of accountants who were paid commission of up to 10% to push investors into the tax-effective agricultural schemes.
In fact, commissions were paid of $344 million over the past eight years, almost half of the $677 million it spent n agriculture expenses over the same period.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
