KEY POINTS:
OPI Pacific Finance is likely to be placed in receivership, its trustee said, after receivers were called in at the stricken firm's Queensland-based parent Octaviar yesterday.
Octaviar, the ultimate owner of OPI Pacific Finance and until recently of investment advisory business Vestar, was placed in voluntary administration by its board on Saturday but US company Fortress Credit Corp yesterday appointed receivers "in response".
Octaviar's collapse severely affects any prospect that OPI Pacific debenture investors, who are owed $241 million, will benefit from Octaviar's so-called "put option".
The put option is essentially an agreement by Octaviar, formerly known as MFS, to make good any losses incurred on loans it made using OPI Pacific's investors' funds.
To date OPI Pacific has claimed A$300 million ($368 million) against the put option and is seeking an additional A$270 million in damages from its parent for the breach of a management agreement.
However OPI Pacific, which froze repayments to investors in January but then secured a moratorium in May, is among a group of creditors owed more than A$1 billion.
A subset of those creditors, including OPI Pacific, owed A$560 million has been considering an offer of A22.5c in the dollar on their claims. The deadline for a decision on that offer was recently extended to September 30, but given recent events it may now be dead.
Nevertheless, OPI Pacific chief executive Jason Maywald said the company was working with its trustee Louise Edwards of Perpetual Trust and its advisers "in relation to the potential impact the events with Octaviar in Australia could have on the moratorium".
"OPI Pacific's objective is to continue to negotiate an arrangement with Octaviar [through the voluntary administrator] that will deliver a repayment proposal that is consistent with the recent directions of stockholders, and that will produce a better outcome than a liquidation of Octaviar."
However, Edwards suggested OPI Pacific's prospects were fairly dim.
"We are looking to see whether or not appointing receivers to OPI Pacific to look after its interests in Octaviar is the best option," she said late yesterday. "It is likely to be the best option."
FIRM IN TROUBLE
* Receivership looks "likely" for OPI Pacific after Finance Fortress Credit Corp appointed receivers to its Queensland-based parent Octaviar.
* The company, formerly called MFS Pacific, owes debenture investors $241 million and is currently in a moratorium.
* Octaviar owes OPI Pacific A$300 million under a "put option" but is the subject of a further claim for A$270 million from its New Zealand subsidiary.
* OPI Pacific's sister company MFS Boston, also in a moratorium, is unaffected.
