CROMWELL DEAL FALLS THROUGH
15 July 2010,
PROPERTY funds manager Cromwell Group’s (CMW) $15 million proposal to buy an embattled funds management business has fallen through, as it was unable to reach an agreement with its banks.
Cromwell managing director Paul Weightman has withdrawn the proposal to buy the management rights to Orchard Funds Management, because major financiers would not agree to the company’s proposed term, interest rate margins and loan-to-ratio covenants.
“It’s just one of those things - you put the proposal up and if you can be happy enough to get something on your own terms, that’s great, but in this case we couldn’t,” he says.
“We would have paid $15 million for the management rights to the company, managing the funds through to the other side of their difficulties, but the fund we would have managed is worth around $1.5 billion.
“Obviously there’s a lot of history with Orchard and the fact they were in default meant we needed some debt to keep it going – we thought it was sensible but it wasn’t acceptable to the banks."
Weightman says other opportunities are out there, as Cromwell continues due diligence on the Qantas Headquarters in Sydney, while shareholders will vote today on funding for 321 Exhibition Street in Melbourne and the TGA Complex in Canberra.
“Cromwell will continue to look for opportunities in the direct property space to acquire businesses and assets that enhance the current business with a target of 80 per cent earnings from property rentals and 20 per cent from funds management," he says.
“When this happens and you don’t get your way, you just do something else."