Creditors in dark over Excell

By Deborah Hill Cone

Friday 1st March 2002

Hartner Group receiver John Waller yesterday refused to reveal details of a transaction in which Eric Watson's Cullen Investments ended up taking control of a key Hartner asset, Excell Group.

In his most recent receiver's report, just filed with the Companies Office, the receiver discloses how the entire Hartner's Group (HGL) produced $1.8 million with no indication how much came from $200 million company Excell.

Out-of-pocket creditors of Hartner's, left owing millions of dollars, are not allowed to know the details of that transaction and have to judge for themselves whether the receiver got the best deal for the asset, considered to be a strong company.

Excell, the former Manukau City Council works department, is now a private maintenance company and turns over $200 million with contracts on both sides of the Tasman and has 1600 staff.

A source close to Excell, who knew details of the deal, said he was shocked at the price the receiver had let Excell go for - another source said he was also shocked.

But Mr Waller, of Pricewaterhouse Coopers (PWC), was unable to disclose the buyer, presumably Cullen Investments, because it insisted upon a confidentiality clause in the contract.

"It's the commercial reality," Mr Waller said.

Excell was bought in 1998 by Vonelle Holdings, a joint venture of Wayne Hartner's HGL and Eric Watson's Cullen Investments, for $25.3 million.

What happened to the funding of Excell between then and February 1, 2001 when Hartner was placed in receivership is unclear.

Sources said in 1999 Excell was growing very quickly and needed more capital but cash-strapped Hartner could not put the money in.

Cullen Investments put cash in through a company called Plant Securities but written into the deal were equity clawbacks.

The money was said by a source to have been borrowed from Elders Finance but Companies Office records do not show any charges over Excell securing loans to Elders. Plant Securities, wholly owned by Cullen Investments, has a charge over Excell.

Sources said it was the clawback provisions that enabled Cullen to later increase its stake in Excell when HGL fell over without apparently paying any cash to the receiver.

Sources close to Hartner said HGL did contribute some later tranches of money but it did not meet its commitments as 50% shareholder and equity was forfeited to Cullen Investments.

A report in the now defunct New Zealand Business Times said Cullen Investments wiped a $28.5 million loan it was owed by Hartner Construction as part of a deal to take full control of the infrastructure maintenance company.

New Zealand Business Times had links to Mr Watson - it was partly bankrolled by his Elders Finance and operated out of the same building as Mr Watson's Cullen Investments.

Another source said Hartner had borrowed from National Bank the entire $7 million cash to buy his share of Excell - a move that may have been the last straw for his construction empire.

Receiver PWC was appointed by National Bank and answers to it - while the liquidator answers to the creditors.

But the liquidator, the national manager of the Insolvency and Trustee Service, Andrew Bridgman, said if the receiver, as agent of the company, had chosen to keep the deal confidential, then he was bound to respect that.

Meanwhile Mr Waller said he wanted to make sure it was crystal clear that he no longer did any work for Mr Watson.

He is a trustee for Mr Watson in Richmond Group, a company partly owned by legendary jockey Lance O'Sullivan as well as by Bridgette and Paul O'Sullivan.

But the link related to work done for Mr Watson about eight or nine years ago and was not a current business relationship.

"Everyone close to the transaction is aware [of it]. There is absolutely no issue," Mr Waller said.

Wilson Neill changes

Comments from our readers

No comments yet