I'll just park this here (AFR's Pierpont, vintage 2002) Note:...

I'll just park this here (AFR's Pierpont, vintage 2002)

Note: Phoenix and Nightingale hold ~28% of SGO

"...Finally, Pierpont can cite the prospectus for Phoenix Development Fund Ltd. In their hurry to crank this one out, the chaps seem to have dropped quite a few details, which may be why it runs to only 16 pages.

Phoenix (not the best choice of name considering the recent adverse publicity given to phoenix companies) is a pooled development fund which is seeking $20 million to invest in a range of small to medium-sized companies. The issue is not underwritten and Phoenix does not intend to apply for an ASX listing.

Punters who want to subscribe for the ordinary $1 shares have to commit for a minimum of $100,000, of which $50,000 is payable up front and the rest on October 15.

Phoenix's prospectus does not nominate any companies in which it plans to invest. So punters are being asked to stump up $100,000 or more for a brand new company with no investment track record and no indication of any company in which it is planning to invest. And as the shares won't be listed, they will be illiquid for all practical purposes.

The company will be managed by a wholly-owned subsidiary, whose executive directors will be Lawrence Case and Lindsay Phillips, who are also directors of Phoenix. The only other director of Phoenix is Peter Nightingale.

The directors, incidentally, are able to subscribe for Phoenix shares on a bit better terms than the mob. Whereas the mob have to pay 50¢ up front and another 50¢ by October 15, the directors will split 5 million shares paid to only 1¢. Any dividends declared on these shares will be applied towards paying them up. The 1¢ shares will not have to pay any calls unless Phoenix is wound up.

So the punters will be getting 80 per cent of Phoenix (presuming the issue is fully subscribed) at $1 while the directors will be getting 20 per cent at 1¢.

As the company has no track record in investing, the only guide as to whether it will be successful is the track record of the executive directors. But for chaps who want to handle $20 million of other people's money, Lawrence and Lindsay are remarkably non-specific about where they've been.

The prospectus says Lawrence is a private investor and company director with over 25 years' experience in financial and investment markets. He was managing director and a substantial shareholder in an investment company that specialised in acquiring undervalued and underperforming businesses and sold out in 1986 after seeing its market capitalisation grow from $0.8 million to $40 million.

Sounds jolly good, except Lawrence doesn't name any of the companies he has adorned. Maybe Lawrence's great success was in the wool company General Investments, where he was a director from 1984 to 1987, but that's only a surmise because the prospectus dates don't seem to be the same.

After Lawrence quit General Investments, by the way, the company got into deep trouble and had to be restructured with support from its bankers in 1990.

Lindsay, according to the prospectus, was managing director of an investment banking firm that specialised in providing services to small and medium-sized companies. It also says he joined MJH Nightingale & Co Ltd in London in 1987 and ``gained extensive international experience in investment banking, including capital raisings, investment analysis, leveraged buyouts and other acquisitions and corporate restructurings''.

Lindsay is also modestly non-specific about the names of companies where he has worked, with Nightingale being the only one mentioned by name. In case any investors need a little more detail, Pierpont can point out  in his usual helpful way  that Nightingale used to share offices with the tax scheme flogger Saxby Bridge, and that Lindsay has been described in this august journal as a close acquaintance of Saxby principal Jeff Braysich.

MJH Nightingale was the manager of Tentas, a technology investment scheme exclusively sold by Saxby Bridge. When last seen by Pierpont, Jeff was appealing against an ATO ruling that Tentas was a sham, meaning the scheme was designed to minimise tax.

The Phoenix prospectus was due to close last Monday. Pierpont thought of trying to find out how much they raised, but gave it up as too difficult.

The Phoenix prospectus, you see, doesn't give either a phone number or an e-mail address for the company. Mere fiddling details, of course."