Wednesday, August 18, 2010

Could last minute negotiations save Direct Factory Outlets?

Last minute negotiations to prevent Direct Factory Outlet's South Wharf shopping centre from being placed in the hands of receivers are continuing, but traders at the centre are putting on a brave face, saying they are confident the centre can succeed.

Since SmartCompany revealed yesterday that executives at the company that owns Australia's eight Direct Factory Outlets stores were locked in crisis talks over the company's mounting debt problems, the drama surrounding the South Wharf centre has escalated.

Australian Competition and Consumer Commission chairman Graeme Samuels, who holds a small stake in the holding company which owns the DFO business, a company called Austexx, has revealed the potentially devastating effect any collapse would have on his personal fortune, which has been estimated at more than $50 million.

A lawyer representing DFO investors and well-known rich list members David Goldberger and David Wieland - who own a combined 50% of Austexx - has said the pair are "vigorously attempting to maximise the position of all stakeholders".

But while receivers circle the DFO complex at South Wharf – which is believed to be saddled with debts of more than $500 million – traders at the centre who spoke to SmartCompany this morning say the situation on the ground may not be as bad as it appears.

SmartCompany spoke with managers at the Hairhouse Warehouse, Villa & Hut and Howard's Storage World outlets at the centre, who remain relatively upbeat despite the new focus on the complex.

Ron Pugsley, manager of Howards Storage World, said he had not had any contact with centre management since the problems at the centre emerged, but says he would not have expected to.

He also says centre management have been open with tenants since the centre launched.

"In the materials that we provided there were no guarantees of numbers, and we were fully aware of that," he says

"We still think it's got enormous potential. It just needs to be advertised and people need to understand the location a lot better."

While Puglsey is remaining positive, ACCC chair Graeme Samuel is clearly unimpressed with the financial problems.

He invested in Austexx before becoming ACCC chair, and then placed his interests in a blind trust.

"This is most distressing indeed because it affects the interests of my children and grandchildren as beneficiaries of my estate," Samuel told The Australian.

Samuel confirmed the asset is the biggest in his portfolio. However, he says he has only received "headline information" about the operation of Austexx since becoming ACCC chair.

Samuel recently removed Austexx CEO Geoff Porz as one of the trustees of the blind trust.

"I have to leave this to others (the trustees) to sort out. But it's true that I have changed a trustee to remove any potential conflicts and ensure they have one, and only one, mandate - to look after the interests of my children and my grandchildren," he told the newspaper.

SOURCE: Smartcompany by James Thomson

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