Credit crunch claims Queensland finance company Asset Loans Group

Listed finance company Asset Loans Group has been placed in voluntary administration after the company was unable to complete the sale of its key asset, the Bowen Marina development in the Queensland town of Bowen, near the Whitsundays.

Listed finance company Asset Loans Group has been placed in voluntary administration after the company was unable to complete the sale of its key asset, the Bowen Marina development in the Queensland town of Bowen, near the Whitsundays.

Asset Loans, which raises money from investors by selling unsecured notes and then provides funding to property developers that have real estate but cannot get funds from traditional financiers, has been hit hard by the credit crunch and subsequent slowdown in the property market.

In recent months the company has been trying to sell key assets, particularly in the Bowen Marina development.

But Asset Loans chief executive Paul Hare told the stock exchange last night that delays in the sale of these key assets (partly because the buyers could not obtain funding themselves) meant the company would not be able to pay redemptions due later this week.

Administrator John Greig from accounting firm Deloitte told SmartCompany this morning that one of Asset Loans Group’s biggest problems was timing.

“The reality is that none of those asset sales are coming to fruition quickly enough to allow for the noteholders redemptions to be paid as and when they fall due.”

Greig, speaking from the Asset Loans office on the Gold Coast, said his first priority was to shore up the company’s short-term cashflow to allow it to continue to trade and then to get a firmer idea of its financial position.

Greig says there are about 400 noteholders who are owed approximately $12 million, but that it is too early to speculate whether these investors will actually receive any money back.

Unsecured private investors are owed around $2.5 million and about $200,000 is owed to external third party creditors for items such as land tax and utlities.

The exact amount owed to secured creditors including Westpac, NAB, Suncorp and Tricom is not yet known, although Greig does not expect it will run into the tens of millions of dollars.

Greig says he will be contacting those companies involved in the purchase of Asset Loans Group’s assets “to make sure the negotiations and the contracts that are on foot actually complete”.

He expects to hold a creditors’ meeting late next week on the Gold Coast.

Asset Loans is chaired by former Queensland premier Rob Borbridge, who appears on the front page of the company’s website spruiking unsecured notes that could earn investors “up to 11%”.

The company, which listed in November 2004 at 50c a share, struggled to stay above its issue price and plummeted from 32c to 6c in the last 12 months.

Another struggling Gold Coast-based property and finance company, Octavier (formerly known as MFS) is also reported to be close to entering administration.

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