Scott Cements Octaviar Coup With New Chief And New Deal

Sydney Morning Herald

Friday May 9, 2008

Scott Rochfort

THE management and boardroom coup at Octaviar by the Singapore-based businessman Chris Scott appeared all but complete yesterday, after the former Liberal Party leader Andrew Peacock quit his chairmanship at the stricken financial company formerly known as MFS.

Two months after the elusive businessman began his drive to install his own people on the Octaviar board, Mr Scott has wasted little time putting his stamp on the company - just five days after the resignation of the former chief executive Craig White.

In a market statement Octaviar announced the appointment of one of Mr Scott's close associates, Craig Chapman, as its new chief. It also outlined plans to sell its investment management arm to Wellington Capital, an investment firm closely linked to Mr Scott.

Octaviar announced it had entered into a "call option deed" granting Wellington Capital rights to buy the management rights over five unlisted Octaviar funds, including the $1 billion Premium Income Fund - where the deposits of its 11,000 unit holders remain frozen.

Octaviar's new "independent" chairman, Paul Manka, said: "The board has recognised it is not in the best interests of creditors, shareholders and other company stakeholders for Octaviar IM to remain a wholly owned subsidiary."

Mr Scott, who inherited a large shareholding in Octaviar through the sale of his listed leisure business S8 two years ago, did not return the Herald's calls.

Wellington Capital's managing director, Jenny Hutson, who joined the Octaviar board last week as part of Mr Scott's coup, said she expected the final purchase price - judging by the current performance of the business - to be "north of $20 million".

This is a far cry from the $1.33 billion that Octaviar's financial services business was worth when its rival, City Pacific, lobbed a merger proposal for it in January.

Ms Hutson said there was nothing untoward in the transaction, which will result in Wellington earning management fees from the funds.

Wellington made $9.2 million in fees and commissions last financial year. Ms Hutson said she would act in the best interests of unit holders in the funds, arguing that she would pursue a $50 million debt from Octaviar and the $67 million owed by MFS Living and Leisure to the Premium Income Fund.

"Our interests are quite different to the people in the Octaviar group," she said.

Ms Hutson noted that Mr Scott was no longer a director or shareholder of Wellington Capital.