Monday 14 July 2008

CEC valuations

I'm happy to welcome local financial commentator Thersites as a new regular contributor to CairnsBlog. He has a speciality in finance and markets.

CEC announced on 8 May that they were pulling out of their 'heads of agreement' with Consolidated Properties for a joint venture on residential property development in the north. Consolidated properties is a subsidiary of the ASX listed Trinity Group.

This is now the subject of legal action by Trinity for damages. The response by Trinity to the ASX seems to indicate alleged problems with the anticipated property valuations.

The original announcement of the agreement by CEC indicated an independant valuation range for their properties between $80 and $120 million which seems to be questionable on the Trinity narrative of events:

  • Don O'Rorke, managing director of Consolidated Properties said, "I was surprised by the low valuations for the portfolio, particularly when CEC announced in the statement to the ASX on 8 April 2008 that the land was worth between $80 million to $120 million, even accepting that only 7 of the 12 properties were valued by HTW Valuers at $41,070,500.

    "To be honest, I'm surprised at the low valuation. Up until we received CEC’s lawyer's letter terminating our agreement, we were proceeding full steam ahead with the project, and as late as 1 May, sent CEC’s lawyers draft shareholders agreement and project structuring documentation for them to review and comment on," Mr O’Rorke said.

    "I'm looking forward to a full explanation from CEC on why it terminated our agreement and why a substantial part of its portfolio was valued at substantially less than the value CEC announced to the ASX on 8 April 2008."

Complicating the situation the 'legal eagle' on both boards is the same man, Tony Hartnell, a previous Australian Securities Commission boss. Hartnell also gave a character reference for the disgraced Rod Adler prior to his imprisonment for criminal offences re the collapse of HIH Insurance.

With an additional political touch the chairman of Trinity is former Qld Labor Treasurer and Member for Cairns, Keith de Lacy while CEC chairman is former Coalition Premier Rob Borbidge. De Lacy was the previous chairman of CEC but stepped down in 2005.

1 comment:

Anonymous said...

There's an interesting connection through all this. Peter Lewis, head honcho of the Trinty Group and Chairman of the Queensland Rugby Union is an old Nudgeee School Chum of ex Mayor Corporal Byrne. They remain good friends and Corporal Byrne hosted Peter Lewis at the Cairns Amateurs. Of course KB was a great "supporter" of has to wonder where his loyalties lie now but of course in his current white shoe role it's easy to speculate.