http://www.smh.com.au/business/debt-burden-a-threat-to-dfo-discount-chain-20100816-126wu.html
Debt burden a threat to DFO discount chain
Daniella Miletic and Ben Butler
August 17, 2010
A KEY part of the DFO retailing empire has been crushed by up to $550 million in debt, throwing into doubt the future of the entire factory outlet chain.
Banks are likely to appoint receivers Korda Mentha as early as today to South Wharf Retail, which owns South Wharf DFO in Melbourne.
The collapse threatens to drag down seven other DFO stores, including the Homebush store, and a developer, Austexx. The stores and Austexx have guaranteed SouthWharf Retail's debts.
Company loan documents show South Wharf Retail owes about $450 million to four banks, Suncorp-Metway, St George, NAB and Bank of Scotland International.
Another $50 million to $100 million is believed owed to mezzanine financiers, which loan documents show are Singapore's state-owned GIC Real Estate and a fund run by Australian developer Mirvac.
Work on South Wharf, a shopping centre next to the Melbourne Convention and Exhibition Centre, has stalled. Only the retail component has been completed, and the centre is still missing a cinema, food court and restaurants.
While shoppers have been slow to embrace the centre, it is believed the banking syndicate is more concerned by Austexx's debt-heavy corporate structure.
South Wharf Retail has also been hit by a lawsuit by a Sydney-based finance company, Ashe Morgan Winthrop, which arranged the company's line of credit with the banks, over $1.7 million in allegedly unpaid commission.
Last night it was not clear whether South Wharf Retail's directors would call in administrators of their own to work alongside Korda Mentha.
Directors of Austexx, which owns three-quarters of South Wharf Retail, did not respond to a request for comment. Austexx is run by DFO's founders, David Wieland and David Goldberger, who have been trying to sell the chain.
Mr Wieland and Mr Goldberger sold their Solo petrol station chain in 1989 for a reported $200 million. This year's BRW rich list estimated they were worth $625 million between them.
The chairman of the Australian Competition and Consumer Commission, Graeme Samuel, is an investor in Austexx through a blind trust, and it is believed his trustee has expressed unhappiness at Austexx's level of debt.
Melbourne Convention and Exhibition Centre operator Plenary Group, which owns one quarter of South Wharf Retail, said it was committed to the shopping centre.
Debt burden a threat to DFO discount chain
Daniella Miletic and Ben Butler
August 17, 2010
A KEY part of the DFO retailing empire has been crushed by up to $550 million in debt, throwing into doubt the future of the entire factory outlet chain.
Banks are likely to appoint receivers Korda Mentha as early as today to South Wharf Retail, which owns South Wharf DFO in Melbourne.
The collapse threatens to drag down seven other DFO stores, including the Homebush store, and a developer, Austexx. The stores and Austexx have guaranteed SouthWharf Retail's debts.
Company loan documents show South Wharf Retail owes about $450 million to four banks, Suncorp-Metway, St George, NAB and Bank of Scotland International.
Another $50 million to $100 million is believed owed to mezzanine financiers, which loan documents show are Singapore's state-owned GIC Real Estate and a fund run by Australian developer Mirvac.
Work on South Wharf, a shopping centre next to the Melbourne Convention and Exhibition Centre, has stalled. Only the retail component has been completed, and the centre is still missing a cinema, food court and restaurants.
While shoppers have been slow to embrace the centre, it is believed the banking syndicate is more concerned by Austexx's debt-heavy corporate structure.
South Wharf Retail has also been hit by a lawsuit by a Sydney-based finance company, Ashe Morgan Winthrop, which arranged the company's line of credit with the banks, over $1.7 million in allegedly unpaid commission.
Last night it was not clear whether South Wharf Retail's directors would call in administrators of their own to work alongside Korda Mentha.
Directors of Austexx, which owns three-quarters of South Wharf Retail, did not respond to a request for comment. Austexx is run by DFO's founders, David Wieland and David Goldberger, who have been trying to sell the chain.
Mr Wieland and Mr Goldberger sold their Solo petrol station chain in 1989 for a reported $200 million. This year's BRW rich list estimated they were worth $625 million between them.
The chairman of the Australian Competition and Consumer Commission, Graeme Samuel, is an investor in Austexx through a blind trust, and it is believed his trustee has expressed unhappiness at Austexx's level of debt.
Melbourne Convention and Exhibition Centre operator Plenary Group, which owns one quarter of South Wharf Retail, said it was committed to the shopping centre.
