A horror share story

[Sim]

Actually Sim, you are out by a factor of 10. The shares are .1 of 1 cent, the lowest possible price on the ASX.

Yes I realised that soon after I posted and edited my post.

The thing that gets me is that there is no requirement to read a PDS before investing - I brought up a share quote on CommSec and it would have let me just purchase whatever I wanted without ANY explanation that this wasn't just an ordinary share (novice investors don't necessarily know that a 5 character ASX code indicates that it isn't an ordinary share).

Naturally this wouldn't have quite such a big impact if the share price was still at $1 or if the market for them was liquid, but the principal still remains - I think this part of the ASX needs urgent restructuring ... it's just too easy for people to make silly mistakes. I'm a "take responsibility for your own actions" and "do your own due dilligence" kind of guy, but there needs to be a line drawn somewhere.

 

[natmarie73]

What a horror story!!! I would think twice about buying anything that was linked to Mac Bank in any way shape or form in the future.

How successful do you think they would be in actually getting these shareholders to fork over millions of dollars in liabilities?

 

[Sim]

How successful do you think they would be in actually getting these shareholders to fork over millions of dollars in liabilities?

There's zero chance of them getting their money - even if they successfully sued and made them bankrupt, there's no way you can recover tens of millions of dollars from an individual like this. The whole exercise would be pointless.

They have little choice but to fix this problem.

 

[chilliaa]

In reality, for these stupid things there needs to be a negative price. If you buy them, you get say 70c, or $1.40, or what ever the market decided was the value but then your still up for the next payments. That's the only way it could be fair.


I feel sorry for those stung by this. Macquarie should take the hit and not try and ruin these unfortunate ordinary people. I can't see how these rotten things should have been allowed to be trading.

See ya's.

By that logic telstra shouldnt have been able to launch its T-3 share offer, or what ever it was called.
Its the same principle, you are effectively paying an upfront instalment with a contractual obligation to pay the balance due at a later date.

You cant expect Macquarie to just fork up the money, because things have gone wrong.

 

[Pete_d]

You cant expect Macquarie to just fork up the money, because things have gone wrong.

Well Macquarie have under written it, so they will have to cough up the dough, unless they can get it from the mum and dad investors.

No winners here.

 

[chilliaa]

Yes I realised that soon after I posted and edited my post.

The thing that gets me is that there is no requirement to read a PDS before investing - I brought up a share quote on CommSec and it would have let me just purchase whatever I wanted without ANY explanation that this wasn't just an ordinary share (novice investors don't necessarily know that a 5 character ASX code indicates that it isn't an ordinary share).

Naturally this wouldn't have quite such a big impact if the share price was still at $1 or if the market for them was liquid, but the principal still remains - I think this part of the ASX needs urgent restructuring ... it's just too easy for people to make silly mistakes. I'm a "take responsibility for your own actions" and "do your own due dilligence" kind of guy, but there needs to be a line drawn somewhere.

Advances in technology has enabled the little guy to compete in the same areana as the professionals.
You cant create a legal system where one set of rules apply to one investor group and different set to a different group of investors when both groups are buying and selling stock in an open market.

One of the ways that the ASX and ASIC attempts to protect retail investors is the requirement for companies to lodge different documents when raising capital. But this can sometimes also hinder retail investors.

For example with the numerous recent capital raisings done by different companies, retail investors are prevented from purchasing more than $5k of stock in a capital raising unless its accompanied by a prospectus. Because of the time and costs of doing this companies have just approached sophisticated investors to raise the bulk of their capital raising requirements.

This can result in the retail investor incurring an unfair dilution in their investment.
If we use QBE as an example, they recently raised $2billion institutional placement and have offered retail investors $100 million under the same scheme (but limited to only $5,000 per retail investor).
The offer price was around $20.50 per share.

Now if i acted in the capacity of a sophisticated investor, i could purchase as much as i wanted at $20.50 per share (even if i had no QBE shares at that point). All i had to do was contact my full service broker and mention that i wanted to bid for X number of shares under the institutional placement (note i dont have to be an actual institution, just a sophisticated investor).

 

[chilliaa]

But as a retail investor its irrelevant whether i have $1000 or $500,000 worth of QBE shares. I am only entitled to subscribe for $5000 worth of stock under the retail entitlements.

 

[chilliaa]

Well Macquarie have under written it, so they will have to cough up the dough, unless they can get it from the mum and dad investors.

No winners here.

Did they underwrite the initial offer or underwrite a guarantee that all future instalments will be paid. Somehow i dont think they will have given assurance against the pay up of the future instalments.

 

[Pete_d]

Did they underwrite the initial offer or underwrite a guarantee that all future instalments will be paid. Somehow i dont think they will have given assurance against the pay up of the future instalments.

Yep, they did

Macquarie has underwritten capital payments due to be paid over the next two years by holders of partly-paid securities in BrisConnections.

http://www.news.com.au/heraldsun/story/0,21985,24666522-664,00.html

 

[chilliaa]

Yep, they did

Macquarie has underwritten capital payments due to be paid over the next two years by holders of partly-paid securities in BrisConnections.

http://www.news.com.au/heraldsun/story/0,21985,24666522-664,00.html

WOW ok, thanks for the heads up, i will make sure i keep macquarie off my list of 'TO BUY' shares.

 

[aaarghhh]

WOW ok, thanks for the heads up, i will make sure i keep macquarie off my list of 'TO BUY' shares.

MacquarieMacquarie[/URL] Capital Advisers, Credit Suisse (Australia), J.P. Morgan Australia and Deutsche Bank

These guys are also underwriting BrisConnections according to the PDS

 

[Pushka]

Macquarie Capital Advisers, Credit Suisse (Australia), J.P. Morgan Australia and Deutsche Bank

These guys are also underwriting BrisConnections according to the PDS

So these guys are extremely vulnerable if the affected share holders launch a Court action, which may result in 'stay of proceedings' meaning that the share holders do not have to part with their money until the matter is heard. And even if the case is decided against the holders, the liability will force them into bankruptcy, and the underwriters not only dont get their money but will have legal bills to pay.

 

[topcropper]

By that logic telstra shouldnt have been able to launch its T-3 share offer, or what ever it was called.
Its the same principle, you are effectively paying an upfront instalment with a contractual obligation to pay the balance due at a later date.

You cant expect Macquarie to just fork up the money, because things have gone wrong.

I dunno.

Seems to me it was all insolvant. Macquarie would have known that. If your a business and your trading insolvant, you are not supposed to trade. Simple. Bit different to a simple fully paid share of a company and the company goes bust. Too bad, but this is different.

T-3.? Whats the difference? If Telstra was insolvant, then t-3 shouldn't have been trading either.

I really don't know anything about all this crap anyway and I don't know why I'm replying, it's way out of my league.

See ya's.



ps, reading on further in this thread it seems macquarie is admitting it was wrong by underwriting the payments.

 

[Strannik]

don't know much about shares, but doesn't owning 60% of the company shares actually give you the right to control the company and change the arrangement?

 

[Sunfish]

You cant expect Macquarie to just fork up the money, because things have gone wrong.

Yes you can. It's called "Underwriting". The underwriter of a float takes a margin and assumes risk.

Clearly Maccas believed their exposure ended when the float was complete. A court of law may disagree.

 

[chilliaa]

Yes you can. It's called "Underwriting". The underwriter of a float takes a margin and assumes risk.

Clearly Maccas believed their exposure ended when the float was complete. A court of law may disagree.

Yes Pete D highlighed that they underwrote both the initial float and the future instalments, so my above comment was wrong.

 

[Alex P Keaton]

You are not taking on the debt as such, but making an instalment purchase, which, unless you sell the shares, is your liability not the company's liability. People who purchase through online trading are not warned that their purchase is only a part instalment, and that they will need to pay more later on. And when the instalments are less than a cent each, when you order as few as $500 worth, that is a lot of liability.

Something like this was on Suzy Orman sometime. I like that show.. its cool

 

[dave99]

Hmmm.. What if you were to buy up 51% of the shares (at $0.001), and wind up the company?

There are 408,670,000 shares issued, so you could buy up 50% for around $190K (assuming there are lots of sellers).

You can then call an EGM and vote to wind up the company and return the assets to the shareholders. Do you think you could get more than $190K of assets out??? Could be an opportunity!

 

[handyandy]

Maybe there is a business opportunity here???

Namely - set up 2 x $2 companies. The first company offers a consulting service of buying all these shares where the current share holders pay, say, 20c per share to 'find' a buyer. The first company takes the payment then lends only the required amount to purchase shares to second company which then buys the shares but owes a debt to the first company.

Prior to April the first company calls the loans and sends 2nd company bankrupt. No assets left for Maq to make a claim.

Saves a lot of peoples bacon at a relatively small cost compared to the installment due in April.


Just a thought - would not personally get involved as I suspect to get yourself involved in this sort of scheme you would need to all your personal assets securely separated - just in case.

Cheers

Ps just worked out based on Daves shares issued you would stand to make some $80mil

 

[Pushka]

There are millions of shares for sale, and no buyers. Dave, I pinged a pm of your suggestion to one of the victims, just to give him some ideas. And of course, to get his lawyers and accountants advice.