Mfs On Slippery Slope Over Loan

Sydney Morning Herald

Wednesday February 13, 2008

Scott Rochfort

THE stricken Gold Coast property group MFS suffered another body blow when one of its listed funds confirmed it was struggling to refinance a $180 million loan due to expire in May.

Three weeks after shares in MFS Living and Leisure were suspended from trading, the fund finally broke its silence late yesterday to confirm the market's fears.

The fund, whose assets include the Falls Creek and Mount Hotham ski resorts and Melbourne Aquarium, announced the resignation of its chief executive, Marshall Vann, and confirmed it was preparing to sell "certain" assets, while keeping its ski field businesses.

The company said it had already entered into an exclusive arrangement to sell its Oceanis aquarium business, including Melbourne Aquarium, that it bought for $150 million in 2006.

It is unclear if the buyer could be Village Roadshow, the recent takeover bidder for Sydney Aquarium, which has already expressed an interest in the assets. Macquarie Leisure's chief executive, Greg Shaw, declined to comment if his fund could make a bid. "We've read their announcement today like everyone else," he said.

The announcement confirmed a Herald report a fortnight ago that MFS Living and Leisure was under pressure to repay a debt of about $110 million to National Australia Bank and another $64 million unsecured loan to the unlisted MFS Premium Income Fund.

No mention was made of speculation that MFS Living and Leisure had already secured an emergency extension to the NAB loan late last year, at a hefty premium to the previous facility.

Despite confirming it could struggle to repay the debt without offloading assets, MFS Living and Leisure said it was "still aiming" to make a distribution at the end of this fiscal year.

MFS Living and Leisure's acting chief executive, John Schryver, declined to comment.

"I just can't comment. Even if I was prepared to, I don't have any information," said Mr Schryver, who has headed the group's Australian Alpine Enterprises business for the past two years.

"I've been in the job for three hours. I am really not trying to be evasive; I simply don't know," he told the Herald.

"All I can tell you is that we're working on the issues in the business," he said.

MFS Living and Leisure's chairwoman, Julanne Shearer, rejected rumours that the fund was near to collapse. "[The fund's] assets valuation is significantly higher than our debts," she said.

As for concerns that investors who have already paid for several incomplete MFS Living and Leisure developments could be burnt, she said the group's 384-unit Northbank development in Melbourne's CBD and the redevelopment of a site in Mount Hotham would be completed.

"All of the assets at the ski fields that have been sold are expected to be completed," she said. "Our businesses are business as usual."

Meanwhile, the separately listed MFS Limited said its shares would remain suspended from trading until the end of March, pending the outcome of a review. It said it was also negotiating how much it needed to pump into its NZ-listed fund, MFS Pacific.

MFS has already had to offload 65 per cent of its Stella tourism business, including Harvey World Travel, for the bargain basement price of $409 million to the private equity firm CVC in order to repay a $155 million short-term debt.

© 2008 Sydney Morning Herald

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