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Trustee investigates trust deed 'breach'

By Nick Stride

Friday 30th August 2002

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DIRK HUDIG: Suggests Trans Tasman Properties breached the trust deed
Trans Tasman Properties faces the enforced redemption of $40.6 million of bonds after an apparent breach of its trust deed.

Following a bondholder complaint, trustee Perpetual Trust is investigating Trans Tasman's controversial purchase of shares in Professional Services Brokers.

If Perpetual finds the purchases breached the deed it can require Trans Tasman to redeem the bonds immediately.

That could prove tricky for Trans Tasman, which is laden with debt and had only $12.6 million of cash at its December balance date.

Trans Tasman paid $5.5 million in December 2000 and a further $1.8 million during 2001 for a 17.2% stake in PSB, an Auckland-based supply-chain management and procurement company.

PSB is 32.8% owned by Hong Kong's SEA Holdings, which also owns a controlling 55% stake in Trans Tasman.

The related-party nature of Trans Tasman's purchase has angered some shareholders.

Guinness Peat Group has threatened legal action while holder Garth Christensen has complained to the Stock Exchange.

Trans Tasman paid $7.3 million for its PSB shares, which Mr Christensen thinks are worth nothing.

The cash injections by Trans Tasman and others allowed PSB last year to pay a $1 million dividend to its shareholders and to redeem $1 million of preference shares, even though it made an annual loss.

Auckland businessman Dirk Hudig, for the D Hudig Family Trust, has written to Perpetual asking the trustee to advise whether Trans Tasman has breached the bonds trust deed.

The deed lists as an enforcement event "transfer of value to Trans Tasman's parent group," defined as "SEA or any related company of SEA."

An event occurs if in any 12-month period there is a transaction of more than $5 million in value with parent group companies.

Mr Hudig said the PSB purchase also apparently breached various other clauses of the deed.

The 10% 2007 bonds, issued last year to replace convertible notes, are secured over Trans Tasman's assets.

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