Loans gave Bell Group a ‘chance’

  By Neale Prior

LOAN deals struck between Bell Group companies and its bankers in January 1990 provided Bell directors with an opportunity to put the group's affairs in order, the Supreme Court was told yesterday.

  Tom Jucovic QC, for the banks, said the Australian directors of Bell were aware that the accommodation from the banks gave them time to examine opportunities such as raising equity, converting debt to equity, and buying back bonds that had been issued by the group.

  Mr Jucovic said the moratorium also gave the group time to conduct asset sales and improve the efficiency of its printing and publishing operations, which included The West Australian's publisher WA Newspapers.

"Loans gave Bell Group a 'chance'"
By Neale Prior

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  Mr Jucovic made the claims in a preliminary argument in the WA [Western Australian] Supreme Court in relation to a massive legal claim by the liquidators of Bell companies against six Australian banks and 14 overseas banks.

  The liquidators claim the banks benefited from an alleged breach of fiduciary duty by Bell directors in January 1990, when they granted the banks security over valuable group assets, including WA Newsapers and and shares in Bell Resources.

  The banks put receivers into Bell companies in April 1991 pursuant to those securities and realised $286 million from sales of those assets. The January 1990 deals included the banks extending until May 1991 loans of $260 million.

  The liquidators, led by Taylor Woodings accountant Tony Woodings, have submitted to the court an eighth version of a statement of claim. The banks are arguing the court should not accept the new statement. Mr Jucovic said it had a different fundamental basis to the previous version.

  The banks also dispute a claim by the liquidators they they knew or ought to have known the companies were insolvent when they took the security in January 1990.

  Mr Jucovic said the conduct of Bell directors would come under scrutiny as part of the legal dispute, with issues including their motives and why they did things in the circumstances.

  He said there was a rational basis for believing that something could be done.

  The value of Bell Group's share in Bell Resources was intimately tied up with a potential deal to acquire Bon Brewing, over which a receiver had been appointed, he said.

  "This is not a case where a company has an asset of $100,000 which will earn interest at X per cent," he said. "This is a company whose value will depend upon the circumstances."

  That point was illustrated by the current sharemarket price of WA Newspaper Holdings, he said.

  WANH had a sharemarket capitalisation yesterday of $1.094 billion, based on a share price of $5.325.

  The argument before Justice Owen continues today.

Picture caption: Tom Jucovic  The loans gave the group time to examine opportunities. PICTURE: MOGENS HOHANSEN

-- © Neale Prior, The West Australian, October 18 2000, p 48. To e-mail letters to the editor use

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