Bravura Capital founders’ ownership hangs in balance

The co-founders of fast-growing financial software firm Bravura Capital are looking like victims of the stockbroker Lift Capital’s problems.

Iain Dunstan and Simon Woodfull, co-founders and joint CEOs, founded Bravura after a leveraged management buy-out of the business from parent company CSC in 2004. They mortgaged themselves to the hilt, listed the company on the ASX in June 2007, and have grown fast through acquisitions of software firms in Australia, Britain and Luxembourg.

Revenue grew to $100.1 million in 2006-07 and $67.6 million for the six months to December 2007. The company was ranked first in the BRW Fast Starters in April 2007 and has a market capitalisation of $207.3 million.

But Dunstan and Woodfull’s shareholdings were backed by margin loans held through the collapsed stockbroker Lift Capital. In fact, the company revealed last week to the market that close to a third of its issued capital is caught up in the collapse.

Dunstan had 28,889,996 company shares caught up in margin lending arrangements with Lift, which represents 20.34% of the firm’s issued capital. And Woodfull has 14,830,693 shares, representing 10.23% of total capital issued, similarly tied up.

On Monday Bravura requested a trading halt in the company’s shares on the grounds of a “potential corporate control transaction” and Merrill Lynch, Lift Capital’s creditor filed a notice of initial substantial holder with the ASX in respect of 44,372,847 shares.

Ownership of the co-founders’ interest now hangs in doubt. Bravura’s company secretary said in a statement that it is trying to clarify whether it has ownership of the shares – or whether Merril Lynch does.

A broking source suggested that the shares are yet to be sold by Merril Lynch. The company has reportedly received a number of approaches from potential buyers, including ComputerShare which is looking at paying $2 a share, and that two private equity firms are also among the interested parties.

Shares last traded at $1.46. Trading has been suspended until next Tuesday 22 April or until an announcement by the company.

But these issues over ownership of the shares are unlikely to be resolved anytime soon.

Neither Dunstan or Woodfull were available for comment this morning.



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