The expansive property investment group built up by West Perth-based SAS Global has collapsed, with four more entities being placed in administration this week following the recent failure of SAS Global Baldivis.
The expansive property investment group built up by West Perth-based SAS Global has collapsed, with four more entities being placed in administration this week following the recent failure of SAS Global Baldivis.
Directors Philip Meagher and Tony Beamish placed SAS Global Mosman Park Equity, SAS Global Coogee, SAS Global Mandurah and SAS Global Seville Grove in administration on Wednesday.
SAS Global Baldivis was placed in administration last Friday, scuttling plans for a $35 million share market float spearheaded by former Fremantle Docker Peter Bell.
National Australia Bank, which is owed $19 million by SAS Global Baldivis, moved quickly to protect its position by appointing KordaMentha partner Brian McMaster as receiver and manager early this week.
In a statement released today, Mr Beamish said: "We set in motion a number of capital raising initiatives to recalibrate the balance sheets and to give syndicates time to realise the value of the underlying assets as the overall market rebounds from the lows of the global financial crisis.
"Unfortunately, we were unable to complete the recapitalisation of the entities due to a number of factors, including dissent and the threat of legal action by some investors in the companies.
"This meant that, in the absence of an unforeseen proposal, the syndicates would be unable to meet impending debt repayments to their lender, National Australia Bank.
"In the circumstances the directors adopted the conservative and prudent approach and moved to put the companies into voluntary administration."
A sixth entity, SAS Global Forrestdale, is also under extreme financial pressure, owing an estimated $70 million to BankWest and TEYS Property Funds.
The SAS Global group has established 11 land development companies since being formed in 2003.
Its strategy involved taking on substantial debt to fund each development, and that has proven costly after it purchased several sites at the peak of the property boom.
The value of all of its properties has collapsed since the time of purchase, putting each entity in breach of its loan covenants.
Collectively, the five entities that have been put in administration owe the NAB about $75 million. Based on current valuations, the bank is likely to retrieve most of its debt but investors, who put in excess of $80 million into the companies, will be lucky to recover any of their money.
Ferrier Hodgson's Martin Jones has been appointed as administrator for all five companies placed in administration, but at time of publication had not responded to enquiries by WA Business News.
Meanwhile, SAS Global Forrestdale purchased a 65 hectare parcel of land on Armadale Road in July 2006 and has completed engineering and civil works, subdividing the property into 105 industrial land allotments.
The SAS entity is believed to owe up to $70 million on the development, which was covered by 66 pre-sales contracts totalling $81 million.
However, as of September, SAS Global Forrestdale had received only 16 settlements.
Messrs Beamish and Meagher have managed fundraising activities for SAS Global, generating significant income.
For SAS Global Coogee alone, the directors pocketed over $2.3 million in management fees and capital raising commissions, while for SAS Global Mosman Park Equity the directors received $4.08 million in commissions and fees.
