Cash-tight City Pacific Again Delays Dividend

Sydney Morning Herald

Thursday July 31, 2008

Scott Rochfort

CITY PACIFIC has for the third time delayed the payment of its interim dividend to shareholders, fuelling fears the debt-laden Brisbane finance and property concern is running desperately low on cash.

The company, which was due to pay its second 3c a share instalment of a 15c interim dividend today, has now announced it will not be paid until November 28.

Only two days since City Pacific announced it planned to extend the freeze on redemptions from its flagship First Mortgage Fund (FMF) for another 180 days, the company said yesterday the delay in the payment of its interim dividend would allow it to cut its debts and "meet ongoing operational expenses".

The dividend was originally due to be paid, in full, on April 30. Yet the group's founder and chief executive, Phil Sullivan, said yesterday City Pacific would not only survive but would be over the worst of its troubles within a "month or two".

Mr Sullivan said he was "very confident" the Commonwealth Bank would extend City Pacific mortgage fund's $130 million loan, which was due to expire today. "They are very understanding," he said of his bankers.

Mr Sullivan was also confident another $100 million CBA debt facility City Pacific has up for review in October would be extended.

In a statement to the ASX yesterday, City Pacific also said the Singaporean investment fund Teak Capital and another offshore investor had agreed to invest $44 million in a Gold Coast high-rise retirement development funded by FMF. Aside from pumping $14 million into the ailing Grande Pacific project, the deal will allow $30 million to be paid back to the mortgage fund by August 29.

The company said it would also press on with plans to offer unit holders unable to withdraw their deposits in the mortgage fund the option to take City Pacific shares instead.

"The preference securities being offered will have certain characteristics representative of the units in FMF, one exception being that they are intended to be tradeable on the Australian Securities Exchange and therefore shall provide a degree of liquidity for the holder," City Pacific said in a statement. It planned to make the offer after an "independent expert" had time to evaluate its audited accounts in late August.

Meanwhile, City Pacific's part-owned developer, CP1, has still failed to provide any updates on whether it will be able to repay a $122 million facility with the CBA. Most of CP1's debt with the CBA is tied with its $650 million Martha Cove marina development in Victoria, which has also borrowed money from FMF.