INVESTORS in the SAS Global group’s property companies face a dire outlook after at least one company was placed in administration last week and two others were forced to cancel restructuring plans.
INVESTORS in the SAS Global group’s property companies face a dire outlook after at least one company was placed in administration last week and two others were forced to cancel restructuring plans.
West Perth-based SAS Global has established 11 land development companies since being formed in 2003, but at least four of those entities are in need of extra capital after being hit by plunging property values.
SAS Global Baldivis, SAS Global Mandurah, SAS Global Coogee and SAS Global Mosman Park Equity have been seeking to restructure their balance sheets in order to satisfy banking covenants which were breached as a result of falling asset values.
Shareholders have been advised that restructuring proposals for SAS Global Mosman Park Equity and SAS Global Coogee are currently being re-examined, and will be asked to consider the restructuring plans at a later date.
SAS Global Mosman Park Equity had been planning a 100 for one share consolidation and a $20 million capital raising to address the breach of loan covenants, while SAS Global Coogee had planned a 10 for one share consolidation and a $4.9 million capital raising.
SAS Global Mandurah had planned to raise $4.9 million.
There were also plans for a $35 million share offer and stockmarket listing of SAS Global Baldivis, with the company to be renamed Mercury and headed by a new management team led by former AFL footballer Peter Bell, but the company was placed into administration last Friday.
The four companies had each taken on substantial debt after a series of investments in 2006 and 2007, at the height of the property boom.
SAS Global Mosman Park Equity purchased a 50 per cent interest in the One Steel development site in North Fremantle for $61 million.
An independent valuation on the site in February this year reported a value of $27.5 million.
In July 2007 SAS Global Coogee purchased a parcel of land adjoining the South Beach residential development for $15.3 million, which was valued in August this year at $10 million.
In December 2006 SAS Global Mandurah purchased land on Leisure Way for $15.5 million, which has since been valued at $10.3 million.
In the same month, SAS Global Baldivis purchased a development site south of Perth for $30.9 million, which has since slumped in value to $19.5 million.
The four companies collectively owe about $80 million to National Australia Bank.
The collapse in property values has led to breaches of banking covenants, leaving investors in the companies little chance of recouping their funds.
SAS Global directors, Phillip Meagher and Tony Beamish, have managed fundraising activities for the group since 2006 and have generated significant income off the back of the property transactions.
For SAS Global Coogee, Messrs Meagher and Beamish received an establishment fee of $1.5 million, and $180,000 in management fees in addition to $758,075 in capital raising commissions paid to Capital Union, a company associated with the directors.
At Mosman Park Equity, Messrs Meagher and Beamish received $180,000 in management fees, a project establishment fee of $2.7 million, while an advisor service fee of $1.28 million was also paid to Capital Union.
