Courtesy of Leghton Holdings’ largess, Nick Bolton’s Australian Style Investments (ASI) has $4.5m cash in the bank. It seems he’s is going to need it.
I couldn’t believe today’s media reports that Leighton had bought ASI’s 77.4 million Brisconnect securities for $4.5m. No doubt it’s a profitable construction contract – and Leighton wants the toll road to Brisbane airport finished. But do they really want to commit another $154m in equity to this project?
No, is the short answer. And it didn’t. Leighton didn’t buy ASI’s securities. It paid $4.5m for the right to vote them at today’s extraordinary meeting (and at any “subsequent meeting held in place of that meeting”). In short, Leighton bribed Bolton to change his tune.
But that means ASI is still on the hook for the remaining instalments on its securities – $154m in total. It looks like Macquarie is going to have to rescue most retail investors but it’s hard to imagine the millionaire’s factory letting Bolton walk away with $4.5m after all the trouble he’s caused. Then again, why would Bolton sign the agreement if he didn’t have an escape mechanism? What’s the use of $4.5m if you’re about to declare bankruptcy?
I’m yet to work out if he’s a slightly amoral genius or just plain dumb. Either way, this saga looks to have a few twists and turns left yet.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.