Bris Connections: Should Mr Csutoros front up with his $400,000?

[winner69]

BrisConn link puts home at risk

Mark Hawthorne
March 24, 2009 - 2:09PM

The human toll of the disastrous BrisConnections float has made an appearance in a Melbourne court.

Steven and Violet Csutoros today sat in a court room that has been packed with some of the most expensive legal minds in Melbourne for the past week.

BrisConnections is contracted to build a $4.8 billion toll road in Brisbane, one of the Queensland's largest projects.

Late last year the couple, from Yallambie in Melbourne's north-east, bought 200,000 BrisConnections units via online trading portal CommSec for a mere $600, plus a brokerage fee.

They have now been burdened with a potential $400,000 liability to the toll road company, of which $200,000 must be paid by April 29, or they lose the family home.

While counsel representing interveners Macquarie Group, Leighton, Deutsche Bank and the State of Queensland have all made submissions in the case between BrisConnections and Australian Style Investments (ASI) in the Supreme Court in Melbourne, hundreds of unitholders such as the Csutoroses have been following the case.

'In the dark'

Geoffrey Slater, representing the couple, told the court that all his clients want is the chance to meet other unitholders and to vote on resolutions put forward by ASI, which wants the next $1 call on BrisConnections units postponed.

"For people like my clients, if that call goes ahead they lose the family home,'' Mr Slater told the court.

"They want to attend the meeting and they want to be informed about the financial position of BrisConnections. At the moment, they are in the dark.''

Mr Slater described his clients as the "roadkill of a toxic security''.

Outside court Mr Csutoros said he bought the units on CommSec for 0.3 cents each, and there was no warning that the shares were partly paid and two further $1 payments had to be made on each share.

"I just simply clicked and they were mine,'' he said.

"There should have been a warning, but there was none.''

Mr Csutoros said his house was worth "about $450,000, maybe $500,000'' and he would lose it if the first call was made on April 29.

Mr Slater told the court there was no warning of further payments on the CommSec site. "It's simply not there".

For $600 he stands to lose the family home. it's outrageous, almost criminal.

The case continues.

mhawthorne@theage.com.au


http://business.theage.com.au/business/brisconn-link-puts-home-at-risk-20090324-989e.html

[Huang Chung]

Thanks for posting that Winner. I live about 500m from where the road is going in, and can hear the sounds of construction every night from the back varandah. Every morning, as I drive by all the construction, I think 'the major shareholder in this project (Nick Bolton) is some 26 year old from Melbourne...incredible'

An absolutely fascinating story, but one I'm glad I have no part of.

It must be a very worrying time for all those mum and dad investors who saw BCS selling for a cent, and thinking they had snared an absolute bargain as they hit the buy button on their online trading account.

[Lizard]

This story - and the earlier one from when ASI/Nicholas Bolton spent about $47,000 and (inadvertently) acquired a $94m liability (see here (http://business.theage.com.au/business/another-brisconnections-bolt-from-the-blue-20081125-6his.html)) - would have most people shaking their heads.

Firstly, surely there is some obligation to brokers, in respect to their client, to ensure that a client is aware they are acquiring a liability. I fail to believe that they have not had other incidents in the past - albeit of a smaller nature - which have highlighted to brokers the risk being inflicted on clients. I can think of a range of simple solutions which would have avoided these transactions completing.

Secondly, as a complete inability for holders to pay up is detrimental to the company (and their other shareholders), doesn't the company or their registry have some role in preventing naiive transactions being settled?

Thirdly, I'm somewhat unsympathetic to anyone who would buy any unit with a 5-letter ticker and not investigate the terms and conditions. That such a person would be considered sophisticated enough to be provided with a $10m margin account is laughable.

In this instance, I think the brokers who transacted the purchases should stump up with a (low interest?) loan to cover the first installment, with security over the post-payment units and agreement that the units be sold to repay debt. Potential loan for second installment if the units prove illiquid. However, I have not looked closely enough at BCS to establish what the likely value of the ex-payment units would be and therefore whether this is feasible.

[The Big Ease]

difficult to say isnt it.
if the broker facilitated the transaction without warning or pre-qualification of the client's "sophistication", then they should be partly liable.

[Huang Chung]

Contributing shares are nothing new, but certainly not common.

Difference this time around to my mind is that we how have a lot of people trading online, rather than through full service brokers....so there is no one to explain what the shares are all about.

Secondly, we've had the 'perfect storm' of a GFC and toll road investments being shunned because of poor performance, both operationally (Lane Cove Tunnel, Eastlink) and as investments (just about all of them, but particularly the other listed toll road in Brisbane (River****ty).

You could always put warning messages on online purchases of this type of share, but I don't know how much good it would do. Look how many punters get caught in the David Tweed style offers.

[OutToLunch]

When I keyed in 'BCSCA' on my Direct Broking screen I got "BCSCA.ASX - Brisconnection Trust - Stapled Security Paid To $1.00, $2.00 Unpaid". There was no doubt as to what I was looking at. Having said that, perhaps not all brokers' screens show that info so there might be a case for people not knowing the full implications of what they're buying.

Still, one needs to do one's homework before buying anything and there is an element of individual responsibility that shouldn't be shirked just because the shares have not done well in this case.

Scary though isn't it, looking at that quote screen for BCSCA, knowing that a few mouse clicks in the wrong place would probably bankrupt me. I cleared my cache afterwards, just in case... :eek::eek::eek:

[Huang Chung]

So you've picked up a couple of hundred thou shares, and are now up for probably half a million bucks within the next 12 months. Is it any wonder there is legal action going on, and people are looking to donate their shares to charity or some homeless guy on a park bench.

What a farce.....

[mark100]

Ok not a nice thing to do but if you are stuck with some BCSCA and you have a granny who has no assets and doesn't have much longer to go - sell them to granny for 0.1c (the last traded price) via an off-market transfer. I'm sure it won't affect granny's pension, in fact she might get an increase from Kevin07

[cantab]

Scary though isn't it, looking at that quote screen for BCSCA, knowing that a few mouse clicks in the wrong place would probably bankrupt me. I cleared my cache afterwards, just in case... :eek::eek::eek:

Yeah, I once reluctantly looked at the depth, it's like looking into the abyss, never again.

[Lizard]

I still don't "get" this difference in moral attitude to wealthcare vs healthcare....

What would an equivalent health-related risk situation be? Perhaps the equivalent of having a road that goes off a cliff with a near 100% chance of fatality for anyone stupid enough or driving in the dark...? Somehow I just can't see you all chanting "well, it was really their responsibility to check the map before they went down that road!"

[Xerof]

May sound harsh but CAVEAT EMPTOR should apply.

a finding in favour of Mr C, who bought these without duress, but also without his doing the research, opens up a hornets nest

[Huang Chung]

May sound harsh but CAVEAT EMPTOR should apply.

a finding in favour of Mr C, who bought these without duress, but also without his doing the research, opens up a hornets nest

You know, I think you're right Xerof. Until now, I'd been feeling pretty sympathetic to the small guy who bought Brisconnect online, without realising the implications of what they were doing. But really, if you are buying shares or units, especially online, YOU are responsible for doing your homework, so if your due dilligence had shortcomings, or you did not understand the structure, you've really got no one to blame but yourself.

I think it is a different story if you sought advice from a full service broker, and they did not warn you that there were further calls on the units, or even worse, if the broker suggested BCS to you, and didn't advise you of the further calls.

For those buying on the float, the details would have been laid out in the PDS. Presumably, these people don't have as big a problem now, as paying $1 (instead of 1c) per unit would have limited the number they acquired (unless they had very deep pockets of course).

[The Big Ease]

I still don't "get" this difference in moral attitude to wealthcare vs healthcare....

What would an equivalent health-related risk situation be? Perhaps the equivalent of having a road that goes off a cliff with a near 100% chance of fatality for anyone stupid enough or driving in the dark...? Somehow I just can't see you all chanting "well, it was really their responsibility to check the map before they went down that road!"

thats an interesting analogy.
cant say i disagree with it.

[Snoopy]

BrisConn link puts home at risk

The human toll of the disastrous BrisConnections float has made an appearance in a Melbourne court.

Steven and Violet Csutoros today sat in a court room that has been packed with some of the most expensive legal minds in Melbourne for the past week.

BrisConnections is contracted to build a $4.8 billion toll road in Brisbane, one of the Queensland's largest projects.

Late last year the couple, from Yallambie in Melbourne's north-east, bought 200,000 BrisConnections units via online trading portal CommSec for a mere $600, plus a brokerage fee.

They have now been burdened with a potential $400,000 liability to the toll road company, of which $200,000 must be paid by April 29, or they lose the family home.


Outside court Mr Csutoros said he bought the units on CommSec for 0.3 cents each, and there was no warning that the shares were partly paid and two further $1 payments had to be made on each share.

"I just simply clicked and they were mine,'' he said.

Mr Csutoros said his house was worth "about $450,000, maybe $500,000'' and he would lose it if the first call was made on April 29.

For $600 he stands to lose the family home.


Csutoros isn't going to lose his family home. He voluntarily traded his home for 200,000 Brisconnection units which will be paid to the first call on April 29th. He will then be able to trade his 'first part paid' shares after the April 29th paid up date expires, for whatever price the market will give him. Should he not like the price, it would appear that if he sells his (freehold?) house, he has the money to pay for his debt. Granted, perhaps he paid over the odds for his inital stake. Maybe he could sue his parents for giving him a genetically inferior brain and get the money back that way? As far as I am aware, no country has succeeded in outlawing stupidity.

SNOOPY

[winner69]

Here's the full story

http://business.theage.com.au/business/why-brisconnections-has-courted-battle-with-unit-holders-20090327-9eca.html?page=1

Likr the bit about all the lawyers craeting a traffic jam as they try to get into court

One cynic has said the legal costs alone could have paid the instalments ... ha ha

Aren;t those guys at Macquaries a bunch of crooks .... good on them if they can make hundreds of millions out of doing these sort of things

[The Big Ease]

that is hilarious and intriguing too.
i cant wait to see how ti all pans out.

my guess is bolton doesnt have much up his sleeve, except for possible liquidation or failing that, exercising the put option.

[Huang Chung]

"For weeks, BrisConnections company secretary Tamira Herbst tried to contact Bolton, but with no luck.
But even if they did speak, 26-year-old Bolton was not a person Rowe and his team could easily communicate with.
There is a substantial cultural chasm between the generation Y internet entrepreneur with a penchant for vintage suits and riding a bicycle inside his office, and hard-nosed pre-baby boomer Rowe and his advisory team."

Luv it......

[The Big Ease]

he sounds like a bit of a dude.
instead of packing his pants about it all, he is lapping it up.
imagine taking over the entire company at 26, even through dubious means ie donations.
that is funny as hell to me.

he could end up having majority ownership and just close the thing down. imagine that!
i admire his attitude.

[winner69]

Simple explanation of the ramifications .... yeah right

http://www.businessspectator.com.au/

Isn't it great for the big players and state governments to be put in the this position ... bloody small shareholders .... why can't they play ball as they promised to do and donate their mhard earned savings to one big black hole

[The Big Ease]

game on.

MQG's shareprice should come under some pressure as a result of this.
I don't think the market is awake to it just yet. how low can she go?


http://www.businessspectator.com.au/bs.nsf/Article/Macquarie-makes-its-move-$pd20090330-QM4TA?OpenDocument&src=sph

[soulman]

The MCG T/O offer just turned things around for MQG and the shares rose over 10% during the intraday.

What a counter good news minus bad news.

[Huang Chung]

Check out the change of substantial shareholder notice, and note how much money is changing hands....

http://www.stocknessmonster.com/news-item?S=BCS&E=ASX&N=209119

Next time you reach in your pocket to pay for a cup of coffee, just think how many BCSCA securities that loose change is worth.....

[winner69]

Bolton wins .... little guys might yet stop this project

http://business.smh.com.au/business/rebel-bolton-wins-briscon-claim-20090402-9kkn.html

[The Big Ease]

well played young man.
4.5m for his troubles.

mums and dads get nothing. every man for himself.

[mark100]

Not sure what his lawyers will take but hopefully he keeps a nice chunk of that cash

[The Big Ease]

there is talk of some hedge funds suing him etc.

i couldnt imagine what grounds they would have unless he put out misleading statements out into the market.

[Damo79]

I'm sure it could be construed as misleading to propose resolutions for a company meeting with the intention of being paid to vote against them. Illegal? No idea...

Well done to Bolton though. It seems obvious in hindsight that of course he was in it to make a fortune, but along with most others, I had the crazy idea that his aim was to bail out the retail investors. I'll have to pinch myself in the future when I think I seem altruism at work in the stockmarket :p

[The Big Ease]

im just laughing at the indignation of these "mums and dads".
they got into this situation because they wanted to make money.

its rather ironic that its the same middle class types who give kids a kick up the backside or marginalise others for their failings yet expect to be bailed out of trouble anytime things get rough. "its not fair" they scream when bolton makes a deal. why not? the stockmarket is not a team game.

[Huang Chung]

An interesting read.....

http://www.news.com.au/couriermail/story/0,23739,25335780-3122,00.html