Multiplex Prime Property Fund admits breach of loan agreements

Multiplex Prime Property Fund, which is being stalked by maverick investor Nicholas Bolton, has admitted is has breached its loan agreements after wiping $47.7 million off the value of its portfolio.

The Fund said in an ASX announcement that it has reduced the valuation on the four main properties in its portfolio by 7.8% to $567.4 million. The Fund owns stakes in buildings including the Ernst & Young Centre in Sydney and Melbourne’s Southern Cross Tower.

But this revaluation means the fund’s loan-to-value ratio has fallen to a point where the fund is in breach of its loan covenants.

The Fund’s lenders have given the manager of the fund, Brookfield Multiplex Capital Management Limited, a waiver in regards to the breach, which will give the manager some breathing space “to pursue alternatives to address the Fund’s current challenges”.

BMCML says it is in “confidential discussions” with the Fund’s lenders and a number of other parties as it tries to find a way to restructure and reduce debt.

“The Independent Directors have appointed advisors to assist in this process and to assess the viability and benefits of any proposal to the Fund and its stakeholders. These discussions are incomplete and BMCML will update investors as matters progress.”

A further complication for the Fund is the appearance on its share register of Nicholas Bolton, the controversial investor who attempted to have toll road company BrisConnections wound up.

Bolton owns 12.56% of the Fund and has indicated he will lift his stake to 19.9%, just below the level at which he would be required to make a full takeover.

Like BrisConnections, the Mutliplex fund has partly-paid share structure, whereby investors are required to make an installment payment of 40c per share in the future.

The Fund’s shares are at 0.002c.