Octaviar agreement to free up cash for OPI
The debt-ravaged ASX-listed firm Octaviar has entered into a deed of company arrangement (DOCA) after a shareholders approved a proposal put forward by the group's major secured creditor, the US-based Fortress group, last night.
Thursday, December 18th 2008, 8:29AM
by David Chaplin
Under the DOCA, Octaviar's New Zealand subsidiary, OPI Pacific, could receive a maximum interim payout of just under A$32 million, well short of its claim of A$370 million but about A$10 million more than would have been paid out if the company went into liquidation, according to the Deloitte administrators report published last week.
Further payments to creditors would be contingent on the sale of OCV's underlying assets – primarily the 35% stake in the Stella travel group, the administrator report says.
However, OPI Pacific's claim on Octaviar has not been finalised by the DOCA. “The mechanism for dealing with any claim by [OPI Pacific], and the amount of that claim, is to be discussed between [OPI Pacific] and the administrators,” the report says.
In its report, Deloitte says Fortress would agree to a reduced payment of $25 million of its secured claim if its DOCA was accepted.
“We consider the key benefit to the Fortress DOCA to be the A$15m that they will not seek to recover from [Octaviar] under the DOCA. Otherwise the DOCA does not appear to offer any significant benefits above the likely return that would be available in a liquidation,” the report says. “Fortress has advised that if a liquidation eventuates they would be demanding repayment of their full debt, currently estimated at A$38.5m.”
The DOCA also would free Fortress from any further legal claims in relation to the conversion of unsecured guarantees to secured loans for two Octaviar entities, including OPI Pacific, on January 22 this year.
Creditors asked Deloitte to investigate the legality of that transaction but the administrators found no grounds to dispute it.
A further winding up hearing for Octaviar and its subsidiaries is due to be heard in the Supreme Court of Queensland today.
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