Property development heavyweight Westpoint has hit back after a two-week battering by the Australian Securities and Investments Commission with claims ASIC is destabilising the industry and not pursuing the interests of investors.
Property development heavyweight Westpoint has hit back after a two-week battering by the Australian Securities and Investments Commission with claims ASIC is destabilising the industry and not pursuing the interests of investors.
But as Perth-based Westpoint fought back on one front, the sharks began circling on another, with listed litigation company IMF Australia confirming it was considering a class action lawsuit on behalf of investors, pending the outcome of the ASIC investigation.
ASIC has sought the appointment of liquidators to two companies within the Westpoint group – York Street Mezzanine Pty Ltd and Anne Street Mezzanine Pty Ltd – because it is concerned that almost 2,000 investors are at risk of losing $147 million through the two companies.
Last week Westpoint, which currently has projects worth around $1 billion under way, appointed voluntary administrators to six of its mezzanine finance companies.
Federal Court proceedings regarding the appointment of liquidators have subsequently been adjourned until December 20.
A deed of company arrangement will be put to creditors on December 22, and Westpoint executive general manager David Jones told WA Business News that, by seeking liquidation, the regulator has chosen the interests of prudential regulation over the interests of investors.
He said ASIC had been reviewing promissory notes issues issued through Westpoint’s mezzanine finance companies since before 2003, and that the company was no longer procuring promissory notes.
“The only funds we are raising now are through regulated products, and we have over $400 million in settlements coming through in the next few months,” Mr Jones said.
“This action couldn’t come at a worse time – we understand the legal requirements of the regulator but they need to look at the interests of the consumer in getting paid; and by doing what they are, they are stopping investors from getting paid.”
Mr Jones said he was brought into the Westpoint team about a year ago to help the company move into a regulated environment.
He said Westpoint “absolutely rejected” allegations by ASIC of misleading and deceptive conduct on behalf of directors.
ASIC has indicated it wants liquidation for the two companies in question.
Mr Jones said if that happened, investors would not recover as much money as possible.
“If liquidators are appointed it will stop work on the projects, with huge sequential effects for the company and the industry,” he said.
“All we want is a fair go and to continue in business as we always have, profitably and prudently, so that the all entitlements of investors and clients are met.”
IMF Australia executive director Hugh McLernon questioned the appropriateness of these actions by Westpoint.
“Westpoint is trying to move away from a position that the Supreme Court has said is unlawful, and is doing it as a consequence of large losses on projects,” Mr McLernon said.
“That is completely inappropriate, and if the ASIC investigation demonstrates that the investors should not have been put in these investments by financial planners, we intend on looking into legal proceedings.”
IMF last week announced an $18 million capital raising to fund future litigation actions.
“There are a number of very interesting funding opportunities on the horizon that would not be appropriate to take on without additional funding,” Mr McLernon said.
