http://www.smh.com.au/business/cash-for-assets-nets-tcard-boss-52...

http://www.smh.com.au/business/cash-for-assets-nets-tcard-boss-526-million-20101024-16zb6.html

THE company behind Sydney's failed Tcard project, Vix ERG, has delivered a $52.6 million cash return to the businessman Duncan Saville, two years after ERG shareholders handed the business to him to stave off insolvency.

But according to the company's financial accounts the payment appears to be part of a complicated cash-for-asset swap for Mr Saville.

A Bermudan company he owns acquired a large part of Vix ERG's transport ticketing business. The cash proceeds from the sale formed part of the funds used to buy back $52.6 million of redeemable preference shares owned by Mr Saville.

Advertisement: Story continues below In its latest financial statement Vix ERG reported the sale of its subsidiaries in Britain, France, Belgium, Sweden and Singapore for $19.3 million ''along with the receipt of various major project milestone payments through the 2010 financial year'' funded the $52.64 million redemption.

The buyer of these businesses was another Saville entity, Bermuda-based Vix ERG Ltd.

The original Vix ERG reported that there was no profit or loss recorded on the transaction, however it resulted in the crystallisation of foreign exchange losses totalling $11.75 million.

The deal appears to carve off the main part of Vix ERG with the subsidiaries generating $105.5 million of the company's revenue for the 2009-10 year and accounting for $6.5 million profit before tax. By comparison, the business still owned by the original Vix ERG generated $48.8 million of revenue last year and made a loss before tax of $5.8 million.

The foreign exchange loss lead Vix ERG to report a loss of $1.84 million for the year ending June 30 despite a $10.9 million profit from operations - more than double that of the previous year.

The reported loss contrasts with a $23.1 million profit the prior year largely provided by a $18.2 million gain on acquisition of the ERG business below book value, as well as a $14.8 million profit from the sale of some ERG assets.

ERG's original investors, who have a ''residual interest'' in the business that remains in Vix ERG but this does not become active until all of the redeemable preference shares, which are owned by Mr Saville, are bought back.

Mr Saville is still owed $58.7 million via the preference shares issued to him. ERG shareholders still own the corporate shell of ERG, now known as Videlli, which is suing the NSW government for $200 million over its cancellation of the Tcard project.