Sandy Maier, chairman of Radius Properties wrote to shareholders on 8 December. If you are a Radius investor, you should have received a copy of this letter. For those of you who haven’t, or are interested, here are the highlights. Sandy writes…

“In spite of the concerted and determined efforts of Chris Holmes and Tony Hannon leading up to the AGM, three new directors were appointed to the RPL Board – Sherry Maier, David Glenn, and myself (the “New Directors”). The final vote at the AGM was approximately 8 million votes in favour of the New Directors to 3 million votes against.”

“The New Directors promised, if elected, to get to the bottom of the various problems within RPL and report back to shareholders fully, frankly and promptly. Unfortunately the news is not good, and your investment in RPL is at risk.”

After analysing previously unavailable company information, we are told that RPL faces some serious short term issues, including…

1. “At the AGM, Chris Holmes presented information that suggested RPL was in compliance with its banking obligations. The New Directors have subsequently determined that this is not correct – and that RPL was, and remains, in breach of its banking covenants. As a result of these covenant breaches, the bank is currently requiring material principal repayments;

2. “More than 1.6 million of the votes cast against the New Directors at the AGM (out of a total of only 3 million) were attached to shares issued in the days prior to that AGM. Those share issuances were a result of two purported transactions, led by Chris Holmes and Tony Hannon. In the New Directors’ view, neither of the purported transactions were in RPL’s best interests. The larger of the two transactions was the purported purchase by RPL of a poorly performing rest home business. Less than two months later, the company has been served with a winding up notice by the IRD. These issues with the IRD were apparent (or should have been apparent) prior to settlement, and the New Directors still cannot see any commercial justification for this transaction.

3. “Material information has been withheld from RPL’s auditor by Chris Holmes and Tony Hannon – thereby affecting the accuracy of the 2009 audited accounts. In turn, this presents problems for RPL should it wish to undertake some form of capital raising;

4. “Via an associated entity, Chris Holmes and Tony Hannon loaned around $1.5 million to RPL at an interest rate of 15%. At the date of the AGM, this loan was overdue and on demand – presenting a significant risk for RPL given there was no obvious way to repay this loan;

5. “The Peppertree development stands half-complete, with no funding available to complete the building work. At the AGM, shareholders were given various assurances by Chris Holmes as to the state of this development, which the New Directors now believe to be misleading.”

Sandy concludes this section of the letter by saying…

“There are a number of other issues we are working through with Chris Holmes and Tony Hannon, which cannot yet be disclosed in detail for commercial and legal reasons. Our current view is that these matters will end up in court.”

Tags: Chris Holmes, David Glenn, Radius Properties Ltd, RPL, Sandy Maier, Sherry Maier, Tony Hannon

This entry was posted on Friday 18th December 2009 and is filed under Radius Properties. Both comments and pings are currently closed.