Trading halted as RMG hits new low

The troubled life of RMG - a creation of entrepreneur Eric Watson and now-defunct sharebroker DF Mainland - hit a new low yesterday.

Trading in the penny-dreadful debt collector's shares on the Australian and New Zealand stock exchanges was suspended until further notice after nine Australian subsidiaries were placed in voluntary administration.

Created in 2000, the Melbourne-based RMG has lost $120 million in less than five years.

RMG said it owed A$21 million ($22.5 million) to secured and unsecured financiers.

RMG said its New Zealand business, Receivables Management NZ was profitable and unaffected by the Australian administration.

Administrator Wayne Benton said he would conduct an "urgent assessment" of the group's financial circumstances.

RMG's shares, which hit a New Zealand high of 37c in 2001, are now worth just 2.2c each, giving the company a market capitalisation of $27.5 million.

RMG was created when the Australian and New Zealand listed oil company Frontier Petroleum bought Receivables Management and associated companies in 2000 in a shares and cash deal.

In a consolidation play, 22 debt collection companies were welded together with Watson's Cullen Investments taking about 27 per cent of RMG's shares.

In July 2001, RMG laid off 160 of its 750 staff in an attempt to save A$6 million. A further 60 staff were culled in May 2002 when chief financial officer Paul Wilkinson and chief executive Adrian Mitri also departed.

RMG raised more than A$30 million through share issues in 2001, 2002 and 2004. In 2002 Phil Newland and Mohindar Randhawa of Cullen Investments and Ferrier Hodgson's Michael Stiassny were appointed to the board.

Also in 2002, the Securities Commission investigated share price movements before RMG downgraded financial forecasts.

Then in August 2003 Stiassny, now chairman, described a A$6.3 million annual loss as "unacceptable" but said a turnaround had begun. However, Stiassny walked away in June 2004 six days after a profit warning.