Mr Barrow yesterday took matters into his own hands, trying to offload his liability by launching a private auction to sell his units at a reserve price of $1.20 in the hope of making a quick profit.
...BrisCon communications general manager Patrick Southam said he was "concerned about the legality" of Mr Burrow's auction.
"We are not associated with this offer-proposal in any way," he said. "If payment of the third and final $1 instalment is not received on or before January 29, it is not possible for a BCSCB holder to deal in BrisConnections securities without payment of the outstanding instalment first."
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The Private Auction is perfectly legal for Sophisticated or Professional Investors [see section 708 of Corporations Act] in three easy steps:
(1) Sophisticated Investor sends Chq A for $1 instalment to BrisCon on Mr Barrow's behalf (cleared by 10 Feb 2010)
(2) Sophisticated Investor sends Chq B to Mr Barrow for excess sale price per unit above $1
(3) BrisConnections fully paid BCS units are issued to Mr Barrow, who immediately transfers ownership of these to Sophisticated Investor on exercise of effective put option.
Three steps. Nice and easy. Legal. BrisCon gets it money. Investor gets slice of BrisCon infrastructure project. Mr Barrow and his companies SettleMate Pty Ltd and DefaMate Pty Ltd get a financing fee for ultimately bringing BrisCon and the new Investor together. Everybodys happy.
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Why is 10 Feb 2010 the date to send instalment cheque to BrisCon instead of 29 Jan 2010?
Well, Wed 10 Feb 2010 is within 10 days after Notice Failure to Pay Instalment will be issued Mon 1 February 2010 as per article 4.7 of the BrisConnections Constitutions:
