Archive | Gainz

Chows revert from hotel to office upgrade for old Colonial Motors building

NZX-listed property company Chow Group Ltd’s management company, CGML Ltd, said yesterday it had axed plans for a 230-room hotel conversion of its century-old 89 Courtenay Place tower in Wellington and, instead, would upgrade it for office use.

Director Michael Chow said the 9-storey 8720m² building would be upgraded to 88% of new building standard, making it one of the highest seismically rated office buildings in the Te Aro district of Wellington.

Mr Chow said the refurbishment would be a multi-million dollar exercise, but didn’t give a precise figure.

The former Colonial Motor Co Ltd building was erected in 1922, with changes to its Courtenay Place façade since then.

Mr Chow said refurbishment would start this month, and phased completion would start happening within 3 months.

The building has 950m² floorplates, some with character ceilings, and it’s best known for its expanse of windows. It has 70 secure onsite parking spaces, accessible from York St.

Last year, the Chow brothers had planned to convert the commercial space into a 4-star 230-room deluxe hotel, but changed their minds after the November 2016 earthquakes, where retaining the commercial property was better aligned to the Chow Group’s business goals.

“An important consideration for businesses is the safety of buildings in the event of seismic activity. The structural integrity of 89 Courtenay Place was not affected by the November 2016 7.8 earthquake, meaning our existing tenants were undisturbed while much of the city came to an abrupt halt.

“As part of our refurbishment plans, we are taking steps to increase our new building standard rating from 71% to 88% and we anticipate high demand for these spaces, which have been offered for immediate lease.” he said.

Naming rights will also be available.

History, Wellington City Council heritage site

Attribution: Company release.

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Briscoe chief attributes strong growth to smart thinking

Briscoe Group Ltd has come out well ahead in a year which group managing director Rod Duke said had been challenging for many retailers.

The company increased net profit by 26% to $59.4 million, or by 20% after excluding a property sale & subsequent tax adjustment.

Mr Duke said: “The focus we place on managing & improving our retail brands underpins our strong profit growth of recent years, as we continually drive to improve the way we do things in every area of the business. This year’s result represents an increase of 77% over the result posted just 3 years ago at a compound annual growth rate of 21% for the same period.”

“The group’s gross profit margin for the year increased from 40.49% to 41.07%, reflecting the continued focus the group has on inventory & promotion management. The ongoing refinement of product ranges, careful foreign exchange management, enhancements to inventory allocation processes and improvements in the analysis of promotions & store inventory are all important factors in protecting & growing gross profit margin.”

“Our online business saw strong sales growth during the year, and process reviews across all service areas has resulted in improved order picking accuracy, reduced backorders, quicker picking speed & faster dispatch times, delivering a better service experience for our growing number of online customers.

“Online sales growth was in excess of 40% and accounted for over 6% of group sales for the year, with strong growth anticipated to continue for the foreseeable future. We remain committed to continual improvement of the overall shopping experience.

“While Rebel Sport has continued to benefit from the popularity of ‘athleisure’ products, there are now more mainstream competitors in this sector. To combat this increased competition, the Rebel Sport merchandising team are working closely with our supply partners to ensure we have the best range of products from the best brands.

“In addition to continuing work in relation to completing the group-owned property projects commenced during the year, the store development team have a number of projects planned to reconfigure or refurbish a number of stores across the group. 3 new online fulfilment sites will be established in existing stores, which will alleviate pressure as well as build capacity for further online growth.”

Highlights for the full year ended 29 January:

  • Total sales, $582.84 million, up 5.4%
  • Same-store sales growth (adjusted for prior year 53rd week), up 4.9%
  • Gross profit, $239.36 million, up 6.9%
  • Gross profit margin 41.1% (40.5%)
  • Ebit $79.83 million, up 21.1%
  • Net profit after tax, $59.42 million ($47.1 million), up 26.1
  • Basic earnings/share 27.2c (21.7c)
  • Diluted earnings/share 26.5c (21.2c)
  • Final dividend, 11c gross, fully imputed, up 15.8%
  • Total dividend for the year 18c/share, up 16.1%

The result included a $2 million gain from the sale of property in Hastings and also the subsequent $790,000 deferred tax liability reversal in relation to this property created in 2011.

Excluding these adjustments, net profit after tax for the full year was $56.7 million, up 20.3%.

The result included $4.4 million of dividends from the group’s 19.9% shareholding in Kathmandu Holdings Ltd.

Attribution: Company release.

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Gunton looks to backdoor-list Retail Property Group through Bethunes

NZ Retail Property Group Ltd owner Mark Gunton announced plans yesterday to backdoor-list the development company through NZX-listed shell Bethunes Investments Ltd.

Bethunes (previously the philatelic business Mowbray Collectables Ltd) said it had signed a non-binding conditional term sheet with NZRPG and its controlling shareholder, Westgate Power Centre Ltd.

NZRPG developed the original Westgate business centre at the top of the North-western Motorway and is developing the second, much larger stage beside the motorway extension, which includes warehousing & industrial uses as well as a new mall & business centre (pictured above).

Mark Gunton.

Mr Gunton’s company also owns 2 North Shore malls where it’s adding residential capacity, at Milford & Birkenhead.

Bethunes summarised the listing transaction thus:

  • Bethunes would transfer all its assets (except for $100,000 in a series of bonds and some cash) into a wholly owned subsidiary, BIL 2016 Ltd (New BIL)
  • New BIL’s shares will then be distributed pro rata to all of Bethunes’ existing shareholders
  • New BIL will assume the name Bethunes Investments Ltd
  • The business of NZRPG will then be reverse-listed into the resulting shell of Bethunes through Bethunes issuing shares to Westgate in exchange for all of the shares in NZRPG
  • Bethunes will then assume the name NZ Retail Property Group Ltd
  • For Bethunes shareholders, the effect if the transaction is completed is that they will retain their current Bethunes shares, which become an interest in NZRPG, but will also, for no consideration, receive shares in New BIL, which will be an interest in the same assets & business plan that BIL presently has.


The initial indicative & non-binding estimates for the transaction are:

  • The shares in NZRPG are estimated at about $400 million
  • The shares in Bethunes (less the assets & receivable held in BIL 2016 Ltd) on a debt-free basis are valued at $1 million plus the NZX bond of $75,000 & $25,000 cash
  • Based on these valuations, Westgate will hold about 99% of the share capital in Bethunes. These values are subject to final determination & agreement and may vary.


The transactions contemplated by the term sheet are conditional on:

  • Bethunes conducting a due diligence investigation of NZRPG
  • Westgate conducting a due diligence investigation of Bethunes
  • Entry into legally binding transaction documents between Bethunes & Westgate
  • Obtaining any necessary waivers from NZX required to proceed with the transaction
  • Bethunes obtaining all shareholder approvals that may be required to undertake the transactions, including under the Companies Act, the Takeovers Code & the NZX listing rules.

Bethunes shareholders must approve deal. They’ll get an independent report and an appraisal report, and Bethunes intends to call a shareholder meeting by 30 June, with the intention of completing the transactions shortly after approvals are obtained.

Bethunes chair Chris Swasbrook  said the Bethunes board was investigating either re-listing New BIL following the transactions or placing New BIL on an alternative share trading platform to retain some liquidity in New BIL. A decision on this will be made before shareholders are asked to vote on the NZRPG transaction.

NZRPG’s business

NZRPG is a retail property developer, owner & manager. It has over 100,000m² of leasable space in its portfolio.

Its intention in listing is to grow its investment portfolio through the strategic development of existing retail centres into planned town environments, and the development of mixed use assets that derive the highest value/m².

The company said: “Historically income generated from property assets has, to a large part, been utilised to fund the ongoing development, planning & design processes necessary to ensure the long-term opportunity for these town centres. As a result, NZRPG is now uniquely positioned with a significant & long-term development pipeline, which will provide long-term income & value growth.

“NZRPG is seeking capital to realise these plans, and a reverse listing is intended to support securing new capital. NZRPG is presenting to investors the opportunity to take part in one of the most significant retail property development pipelines in New Zealand. The company is seeking capital to embark on the next phase of its pipeline, which includes one of New Zealand’s biggest mixed use property development opportunities – Westgate town centre.

“In addition to the ongoing completion of the 48.5ha Westgate town centre, both the Milford centre & Highbury centre are undergoing retail development with a residential overlay. The success of these developments is underpinned by the expansive urban town planning that is reshaping Auckland.

“These growth opportunities include the provision of residential overlays to all the town centre properties (Milford, Highbury & Westgate) which will both enhance the retail performance of the centres and allow for significant tranches of capital to be recycled into the core business. The Milford development plan is underway, with completion due in mid-2019.”

Swasbrook’s top table links

Bethunes chair Chris Swasbrook is managing director & founding shareholder of the manager of Elevation Capital Ltd. Precinct Properties NZ Ltd chair Craig Stobo chairs Elevation’s manager and is a shareholder, and corporate legal advisor Andrew Harmos is a non-executive director & shareholder.

Mr Swasbrook was previously a partner of Goldman Sachs JBWere Pty Ltd and co-head of institutional equities at Goldman Sachs JBWere (NZ) Ltd.

Mr Stobo has worked as a diplomat for the New Zealand & Australian governments, as an economist, investment banker and as chief executive & executive vice-president of BT Funds Management NZ Ltd.

Mr Harmos is a founding partner of specialist corporate legal advisory firm Harmos Horton Lusk Ltd, formed in 2002 after his 16 years as a partner of Russell McVeagh. He’s also a director of ASX-listed Scentre Group Ltd.

NZ Retail Property Group
Elevation Capital

Earlier stories:
15 February 2017: Auditor-general argues for more Westgate deal disclosure but doesn’t see wrongdoing
25 May 2016: Milford shopping centre expansion approved
22 February 2013: Gunton gutted by Milford decision but will fight on
1 February 2010: Retail Property Group puts 48 units up for sale
18 November 2009: Opposition pushes Massey North start out 8 years from conception
19 December 2008: Expanded Westgate a new Newmarket?
Attribution: Company release.

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McConnells follow up Harker deal with Hawkins sale to Downer

Downer EDI Ltd has signed an agreement to acquire the construction, infrastructure & project management businesses of the Hawkins Group from the McConnell family.

In a separate transaction, the McConnell family sold the Harker Underground business to Australian company Abergeldie Complex Infrastructure and the Harker family 5 weeks ago. That transaction was due to be completed on 28 February.

The Downer transaction, announced on Wednesday, is due to be completed on 31 March. Downer chief executive Grant Fenn said Hawkins would continue to operate under its current brand.

Mr Fenn said Downer had become a leading provider of services in a range of markets, including transport, telecommunications & water. In Australia it has a major focus on the mining sector.

In New Zealand & the Pacific, Mr Fenn said Hawkins’ construction & infrastructure divisions would complement Downer’s engineering, construction & maintenance capabilities and provide a platform for growth: “It is estimated that over $50 billion will be invested in non-residential construction in New Zealand over the next 5 years.”

Mr Fenn said Downer would fund the acquisition through existing debt facilities and it would be earnings-accretive in its first year. He didn’t put a price on the transaction.

Hawkins has a number of high profile projects underway, including the construction of Auckland’s Park Hyatt Hotel in the Wynyard Quarter in a joint venture with China Construction for the Fu Wah International Group. Other Hawkins projects are the State Highway 16 Lincoln-Westgate upgrade, the pier B extension at Auckland Airport, the Rongotai control tower at Wellington Airport, Wellington City Council’s Arlington housing project, the Christchurch Town Hall and the Avon River precinct.

Both groups have long NZ histories

Downer has a New Zealand history dating back to 1933 though it’s based in Australia now, and Hawkins’ history dates back to 1946, when Fred Hawkins formed his building company in the Waikato.

McConnell Dowell Corp (MacDow), headed by Malcolm “Buck” McConnell & Jim Dowell, was backed into Hawkins Construction in a reverse takeover in 1982. MacDow went on to become an international business and international ownership, and is now owned by South African company Aveng Ltd.

From 1994-2000, the McConnell family – Buck McConnell’s sons David & John and daughter Nancy – bought back control of Hawkins Construction, then added an infrastructure division in 2007 and the underground drilling business, Harkers, in 2012.

On 2 February, Hawkins sold Harker Underground Ltd to Australian shaft & tunnelling company Abergeldie Complex Infrastructure and the family of former owner Graeme Harker.

Abergeldie Harker Ltd will be 80% owned by Abergeldie, 20% by Graeme Harker’s son Mike. Mike’s brother Phillip will also remain a key staff member.

Abergeldie founder & executive chair Mick Boyle said the purchase would strengthen tunnelling & shaft capabilities in both New Zealand & Australia “and make us leaders in both countries”. Abergeldie Harker would also bring to the New Zealand market some niche capabilities that Abergeldie has developed, such as shaft sinking by blind boring, pipe relining, excavation by blasting and capabilities in the water & rail sectors.

Harker national manager Matt Mules has been appointed general manager of Abergeldie Harker.

Downer Group NZ
Abergeldie Harker

Attribution: Company releases, Companies Office.

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Argosy says delayed quake insurance payout won’t hurt dividend

Argosy Property Ltd said on Friday it had a $50 million estimate of the cost of reinstating the quake-affected NZ Post House in Wellington, based on a preliminary scope of works.

The building at 7-27 Waterloo Quay sustained damage to building services in the 7.5-magnitude Kaikoura earthquake on 14 November 2016. Argosy chief executive Peter Mence said independent engineers had confirmed that the building remained structurally sound, but significant replacement of fitout & services was required. NZ Post has reoccupied the ground floor & 4 other levels.

Mr Mence expected the damage to the building services & fitout to levels 1-4 & 7 would be repaired during the next financial year. Argosy has lodged a claim for the reinstatement cost & associated loss of rents under its material damage & business interruption insurance policy (less a $4.8 million deductible).

Under New Zealand accounting standards, Argosy can’t include expected insurance proceeds in its financial results until the proceeds are quantified & agreed. Mr Mence said that if they weren’t included, the loss of rents for the current year would have a net after-tax impact of about $1.85 million, or 0.23c/share in the period to 31 March 2017.

“This will have no impact on the March 2017 full-year dividend, which as previously announced is expected to be 6.1c/share and be fully paid from net distributable income for the year.”

Attribution: Company release.

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NPT works through detail of Kiwi bid

NPT Ltd chair Sir John Anderson said on Friday negotiations were progressing constructively with potential cornerstone shareholder Kiwi Property Group Ltd, but he still hasn’t set the date for a shareholder meeting to consider offers.

NPT said on 11 January the original bidder to take the company over, Augusta Capital Ltd, had dropped its High Court quest to get that meeting brought forward, and Sir John didn’t mention Augusta in his statement on Friday.

On the Kiwi proposal, he said: “Attending to the finer details of the management agreement, sale & purchase agreements and terms of the share subscription, as well as arrangement of other funding for the transaction, is taking longer than initially expected.

“It is critical that the board & Kiwi take the time to get this level of detail right, and for the board to ensure that it achieves the best possible position for NPT & the shareholders in the circumstances.”

He expects the shareholder meeting will now be held in April.

Attribution: Company release.

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Meridian launches $150 million bond issue

Meridian Energy Ltd is seeking up to $150 million from investors in its 8-year unsecured, unsubordinated fixed-rate bonds, which will go to a bookbuild and close on Friday 10 March.

The offer of $100 million, plus up to $50 million in oversubscriptions, is to institutional & New Zealand retail investors. There is no public pool.

Meridian expects the bonds will be quoted on the NZX debt market and have a long-term credit rating of BBB+ from Standard & Poor’s.

The bonds have a maturity date of 20 March 2024 and an indicative margin of 1.5-1.6%/year.

Attribution: Company release.

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US economy: Replacing the apparatus of government, talking up a rate rise

I read the promotion for a US strategic investment conference today which made me ask where the US thinks its economy is going, in light of a welter of outpourings from the Federal Reserve and what is widely reported as chaos at the new government.

As the new president still works to get his team in place, and still has time to spray others on Twitter for purported crimes against the nation, the sharemarket is riding high and the Fed has opened up about policy, perhaps as a forward defence on the assumption that President Trump will openly criticise the central bank no matter what option it chooses to make.

Global finance & geopolitics writer Harald Malmgren is quoted in the Mauldin Economics promo for the conference just down the road from Disney World in Florida: “What [Trump] has basically done is clear the deck in order to bring in an entirely new establishment. And you could say it’s risky, but you could also say it’s a chance to replace the entire apparatus of government in the US with fresh people and no past agenda…..

“When you tell the story of the US economy, there are really 2 stories: There is the Fed’s story…. which is, the economy has been growing since the Great Financial Crisis; it’s better now than it was because it’s safer than it was. But just take the 95% of people in the streets…. [and] you get 2 groups: one group that is no better off, and then a large, large group that is much worse off.”

Trump “has to be outrageous” for change to occur

Dr Malmgren’s daughter Pippa – an economist & trend spotter who advises investors & governments about economic policy & investment strategy, and also cofounded a company that makes drones – added: “[Trump] is like a guy with a bulldozer: he goes into the system and razes everything. And this is what people want, because they realise that the government is broke. It’s got its finances in a terrible mess; it’s never gonna be able to look after you. So if you want to look after yourself, then you want a world that has smaller government, lower taxes, less red tape – and in order to get there, he has to be outrageous in his attack on the system…. So that’s the world we’re looking at. It’s going to be a rough ride, but somebody had to do it.”

It’s a country heading in multiple economic directions simultaneously, and it’s hard to know which of these directions will dominate the impacts for a place like New Zealand.

Fed creates new explanatory charts

On Friday, the Fed released examples of new charts – sometimes called fan charts or, alternatively, the fudge the Fed needs to wade through before picking a number for its target funds rate.

The new chart & related material “illustrate & describe the uncertainty that attends Federal open market committee participants’ macroeconomic & interest rate projections,” the US central bank said. The fan charts will be included in the summary of economic projections, starting with the minutes of the 14-15 March meeting, scheduled for release on 5 April. The examples released yesterday are based on data from last September & December.

The Fed under Janet Yellen (pictured above), chair since February 2014, has had far more public voices than under previous chairs Ben Bernanke, Alan Greenspan & Paul Volcker. During Dr Yellen’s rein, all the board has taken part in elaborating on policy, and they’ve all attracted more attention as analysts search for a glimmer of movement in stated direction.

As the uncertainty of US economic direction has grown in the first weeks of the Trump presidency, the output of Fed speeches with concrete messages – rather than the standard “I have a speech to make and will tell you nothing you can put a finger on” – has been up.

Speeches galore by Fed heads

This week, Governor Lael Brainard addressed transitions in the outlook & monetary policy on Wednesday. On Friday, Dr Yellen & 2 other governors made speeches on monetary policy topics – Dr Yellen discussed the choices from adding accommodation (quantitative easing) to scaling it back, Vice-chair Stanley Fischer discussed the question of how to decide monetary policy (by rule, committee or both), and Governor Jerome Powell spoke in innovation, technology & the payments system.

Mr Powell addressed the economic outlook & monetary policy in a speech to the Forecasters Club of New York on 22 February and Dr Yellen spoke on the same topic at Stanford University in January.

Going back…..

In December 2005, the Fed’s open market committee saw nothing out of the ordinary happening to the economy. For example: “Although some scattered signs of cooling of the housing sector had emerged, the pace of construction activity & sales remained brisk”.

The minutes of the March 2006 meeting also presented a contented committee: “The information reviewed at this meeting suggested that economic activity was expanding strongly in the first quarter. Consumer spending was on track to rise at a robust pace…”

At the end of the Greenspan era, the 31 January 2006 meeting, Federal Reserve Bank of Richmond president Jeffrey Lacker was the one voice opposing foreign currency intervention by the Fed. The minutes noted: “In his view, such intervention would be ineffective if it did not also signal a shift in domestic monetary policy. And if it did signal such a shift, it could potentially compromise the Federal Reserve’s monetary policy independence.”

Mr Lacker was often a lone voice for the rest of his term as he questioned the extent of quantitative easing and pushed, well ahead of others, for the bank’s target cashrate to be raised. Another outspoken dissident, Esther George of Kansas, replaced him on the committee in January 2013, and Mr Lacker is now an alternate member.

Yellen says rate rise in 10 days likely

Dr Yellen, in her speech to the Executive Club of Chicago on Wednesday, reviewed the conduct of monetary policy over what she said was the nearly 10 years since the onset of the financial crisis. Even that number’s wrong: Most mark the start of the crisis as 2008, I’ve always marked it as 2007, but the money the Fed was pouring into early versions of quantitative easing at the start of 2006, combined with currency manipulation then, makes it an 11-year saga.

Dr Yellen said the Fed policy strategy “for systematically pursuing its congressionally mandated goals of maximum employment & price stability has not changed during this period”, but the open market committee had made “significant tactical adjustments” along the way.

She saw 2014 as a turning point, when the committee began to transition from providing increasing amounts of accommodation to gradually scaling it back, but progress was uneven in 2015 & 2016.

One cause of concern was that “the gains during this economic recovery have been skewed toward the top of the income distribution, as has been the case for quite some time. Families at the 10th percentile of the income distribution earned about 4% less in 2015 than they did in 2007, whereas families at the 90th percentile earned about 4% more.”

Assuming employment & inflation “are continuing to evolve in line with our expectations” when the Fed next meets on 14-15 March, Dr Yellen said “a further adjustment of the federal funds rate would likely be appropriate”.

San Francisco Fed president John Williams told a California audience on Tuesday: “In my view, a rate increase is very much on the table for serious consideration at our March meeting.”

NY Fed chief sees even stronger growth

New York Fed president & chief executive Bill Dudley told a Cornell College of Business annual New York City predictions event a week earlier that, if growth was “slowly above trend” and inflation headed towards 2%, “we would expect to gradually remove further monetary policy accommodation, snug up interest rates a little further in the months ahead”. However, unlike the others, he added: “But the uncertainty around that forecast is pretty high.”

Still, uncertainty wasn’t going to get in the way of another of his comments: “I think now the balance of risk is gradually shifting, where the possibility is that growth could actually be stronger than expected, rather than weaker than expected. The markets expect fiscal stimulus out of this Administration. That’s another factor that probably will over time tilt the equation more to the upside.”

Generally, he said, “If you look at the Federal open market committee projections, people think that the federal funds rate in the medium term is going to more like 3% rather than the 4% that might have been attained historically.

“Now there’s one little problem with this. Economists are terrible at actually forecasting productivity growth. So just because productivity growth has been weak over the last few years doesn’t mean it will necessarily be weak over the next 5 years.”
All of that amounted to an ‘I don’t know’, but weighted towards steady rises.

All of these discussions in the last couple of weeks have revolved around a small set of figures whose movements dictate the setting of a funds rate.

Looming in the background, and not mentioned as a factor in those calculations, is the US national debt, which made it to $US1.14 trillion at the September 1982 balance date, rose to $US7.9 trillion in 2005, hit $US10 trillion in 2008, $US13 trillion by June 2010 and $US14 trillion by the end of that year, then climbed to $US19 trillion at January 2016.

US Federal Reserve, 3 March 2017: Fan charts
Fed governors’ speech links
Janet Yellen, 3 March 2017: From adding accommodation to scaling it back
25 November 2008: Federal Reserve announces the creation of the Term Asset-Backed Securities Loan Facility (TALF)
28 October 2008: Federal Reserve and Reserve Bank of NZ announce the establishment of a temporary reciprocal currency arrangement
29 September 2008: Federal Reserve and other central banks announce further co-ordinated actions to expand significantly the capacity to provide $US liquidity
10 August 2007: FOMC statement: The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets
Mauldin Economics, strategic investment conference
The Balance, national debt

Earlier stories:
24 September 2016: Absurdity still wins at the Fed
17 March 2016: One Fed member baulks but rest stick with worrying

Attribution: Fed speeches, Mauldin Economics, The Balance.

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ASIC takes Westpac to court alleging irresponsible lending

The Australian Securities & Investments Commission (ASIC) launched proceedings against Westpac Banking Corp on Wednesday for alleged breaches of responsible lending laws on home loans.

The federal agency is seeking civil penalties for contravening the responsible lending provisions of the National Consumer Credit Protection Act between December 2011-March 2015.

ASIC alleges the bank failed during that period to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts.

The agency alleged Westpac:

  • used a benchmark instead of the actual expenses borrowers declared in assessing their ability to repay the loan
  • approved loans where a proper assessment of a borrower’s ability to repay the loan would have shown a monthly deficit, and
  • for home loans with an interest-only period, failed to have regard to the higher repayments at the end of the interest-only period when assessing the borrowers’ ability to repay.

The National Consumer Credit Protection Act has provisions to ensure that credit providers make reasonable inquiries about a borrower’s financial situation and assess whether a loan contract will be unsuitable for the borrowers.

The first hearing for the proceedings will be on 21 March in the Federal Court in Sydney.

ASIC said the action against Westpac followed its review of interest-only home loans, in which it reviewed the responsible lending practices of 11 lenders.

Concise statement – ASIC vs Westpac
Originating application
20 August 2015: Home loans review
ASIC release, 20 August 2015: Lenders to improve standards following interest-only loan review

Attribution: ASIC release.

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$8 million Masala assets forfeiture agreed

The High Court has agreed to an $8 million assets forfeiture order between the Commissioner of Police and 8 companies & 2 individuals associated with the Masala restaurant chain.

Justice Rebecca Edwards said in her decision approving the settlement today: “The settlement sum of $8 million represents almost all of the unlawful benefit said to have been derived from the tax evasion offending. The settlement sum is expected to be met in full through the sale of restrained properties. Forfeiture in that amount meets the deterrence purposes of the forfeiture regime as set out in section 3 of the Criminal Proceeds (Recovery) Act. It also reduces the ability of those associated with the criminal activity to continue with that criminal enterprise.”

Inland Revenue, Immigration NZ & the Department of Labour began investigations in 2012 into companies & individuals involved with Masala. Justice Edwards said: “Those investigations identified widespread & systemic tax evasion & immigration-related offending by those involved with the Masala group….

“It has also been agreed as a condition of the proposed settlement that upon the assets forfeiture order being discharged by the Official Assignee, Inland Revenue will refrain from taking any steps to recover the outstanding tax, any related penalties & use-of-money interest.

“Neither this undertaking nor the settlement affects the ability of Inland Revenue to bring criminal charges for the conduct underlying the proceeding against the respondents, for example, in relation to tax evasion.

“As that particular condition does not concern the forfeiture of assets, it falls outside the terms of the settlement to be approved by the court.

“The respondents have also executed separate deeds of agreement as between themselves which relate to certain of the properties. Those agreements do not form part of the settlement for which approval is sought by the court.”

The 10 Masala group parties to the settlement were Joti Jain & Supinder Singh individually and 8 companies – Investments Ltd, JKK Holdings Ltd, JKK Trustees Ltd, Bluemoon Group Ltd, Akl Sunrise Co Ltd, DC Empires Ltd, CHK Investments Ltd & SRKK Group of Trustees Ltd.

Ms Jain & Rajwinder Singh Grewal were sentenced in 2015 to home detention and ordered to pay reparations on a long list of immigration & exploitation charges.

Attribution: Judgment.

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