...exhorbitant fees is starting to become synonymous. Rather sad to see this happen to Camperdown Dairy International but also not a surprise to some of us.
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Camperdown Dairy International’s costly loan interest
PETER HEMPHILL, The Weekly Times
August 16, 2017 12:00am
LOAN interest rates of 235 per cent contributed to the collapse of infant formula manufacturer Camperdown Dairy International, according to an administrator’s report.
In a report submitted to last week’s creditors meeting, administrators Craig Shepard and Jarrod Villani, of KordaMentha Restructuring, said “onerous” interest rates, along with high management fees, lack of working capital, a downturn in the dairy market and a failure to maintain accurate books and records resulted in the $83.7 million failure of CDI.
KordaMentha said CDI founder Bill McDonald’s company, MCG Group, was charging between $200,000 and $300,000 a month since inception until he sold up his shareholding in CDI in November last year.
But Mr McDonald told The Weekly Times he had forgone his management fees from February to November last year.
Current director Gavin Evans ran the dairy company through Evans Agribusiness Trading (EAT Group) Services from November last year until it was placed in administration on July 5 this year, charging $82,000 a month.
Mr Evans and CDI’s only other current director, millionaire Queensland businessman Graham Huddy, told the administrators one of the catalysts for the collapse was the infant formula company’s inability to fund the purchase the Camperdown Cheese Company factory site in Manifold Street, Camperdown, as “support from the primary lender was withdrawn”.
Ironically, the primary lender was Mr Huddy’s private company Isa Sun Pty Ltd — the same company that last November bought the majority share in CDI from Mr McDonald.
When CDI was placed in administration, Isa Sun was owed $54.2 million and Barings Australia $23.6 million.
KordaMentha said CDI had been unable to make a profit due to high labour and contract costs.
KordaMentha said the net asset position deteriorated from a deficiency of $58 million on June 30 last year to $83 million on June 30 this year.
“The major contributor of this deficiency is the increase in interest on loans over the years,” it said.
Accounts show finance costs rose from $4 million in 2014-15 to $26.6 million in 2015-16 and $20.8 million in 2016-17.
The administrators investigated whether CDI could have been trading while insolvent from June 7 this year until July 5, when the directors placed the company into administration.
The Weekly Times is not suggesting the directors traded while insolvent.
Meanwhile, Barings Australia will receive $8.5 million from the sale of three grazing properties owned by CDI at Frances and Bool Lagoon in South Australia’s South East and Minimay in Victoria for $13 million.
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