Equititrust reveals details of problem loans to 'King Con'
Sydney Morning Herald
Friday February 25, 2011
THE mortgage fund operator Equititrust has confirmed its frozen fund has problem loans linked to Dudley Quinlivan, a former two-time bankrupt who was once denounced in Queensland's Parliament as the "King Con" of property marketeering schemes.But the company has revealed in an update to investors who have about $200 million frozen in the Equititrust Income Fund that it should return to "liquid status" this year despite loan impairments for the half-year ending December 31.The update detailed the status of the fund's big property loans for the first time, including impairments for the December half year, which wiped $12 million from the value of the company's "capital warranty" investment in the fund. This leaves $28 million as a buffer against further losses.It reassured investors that the warranty was designed to absorb impairments and shield ordinary investors from such losses and that the threat of future losses was diminishing. "As we continue with our aggressive realisation strategy, the risk of significant further impairments is reducing, and asset realisations should be sufficient to ensure that EIF returns to a liquid status during 2011," it said.It is understood that up to $70 million of Equititrust's loans relate to Croftworth Property, a company associated with Mr Quinlivan, which had receivers appointed this week.Equititrust would not comment on the amount involved, but the receivers confirmed that Equititrust was owed a "substantial sum". Equititrust said it held first mortgage over Croftworth properties and was therefore unaffected by the appointment.Asked why the company did business with the controversial developer, a spokesman told BusinessDay: "Equititrust assesses all loans in accordance with a comprehensive due diligence process which is reflective of the prevailing economic and market conditions and places heavy reliance upon the quality of the security offered."Last month the full Federal Court in Brisbane dismissed an appeal by Mr Quinlivan seeking to overturn a ban preventing him from acting as a company director for five years.The Australian Securities and Investments Commission expressed concern that Mr Quinlivan continued to be involved in large-scale commercial property developments.
© 2011 Sydney Morning Herald