Mayfair 101’s noteholders have expressed their anger at the corporate regulator’s mis-guided campaign against private equity firm Mayfair 101 following recent sales data which shows the group’s 200-plus real estate portfolio in Mission Beach would be worth approximately $400 million today, an increase of $170 million on Mayfair’s 2019 acquisition cost.
Mayfair 101 noteholder and Cairns resident Bruce Golightly says ASIC is now spending taxpayer dollars attempting to conceal the damage caused by the regulator's misguided campaign against the investment group. Image source: Cairns Post
The 74 percent uplift in value of the three main suburbs comprising the Mission Beach region, according to CoreLogic data, does not take into account the redevelopment of the region’s key driver of property prices, Dunk Island, which is yet to be redeveloped under the control of new owners.
According to ASIC filings, 95 properties purchased by Mayfair in 2019, which subsequently had receivers appointed following ASIC’s campaign against the group, were collectively sold by the receivers for more than Mayfair paid for them. The Mayfair entity had raised $65 million from 128 Australian lenders and there were no complaints from its lenders prior to ASIC freezing the group’s activities in April 2020.
The performance of the assets raises the question of who authorised ASIC’s legal representatives to submit court statements describing Mission Beach as ‘a heap of sand’, ‘a heavily depressed, small coastal town in far north Queensland’, the redevelopment of Dunk Island a ‘pipedream’, and the assets ‘very risky’ and ‘highly speculative’. These assertions were made despite the assets being freehold Australian real estate, and without the regulator checking Mayfair’s development plans for the region or the group’s financials. ASIC did not interview the group’s Managing Director, James Mawhinney, about the funding strategy for the project.
The Mission Beach property acquisitions were part of a carefully coordinated strategy by Mayfair 101 to redevelop the region into a ‘tourism mecca’ which would have created more than 10,000 jobs for the Far North Queensland region and delivered more than $1.6 billion in gross domestic product growth.
Cairns-based lender Bruce Golightly advanced $1 million to Mayfair in 2019, a matter of months before ASIC went to the Federal Court labelling the debt-funded property portfolio a Ponzi scheme, banning Mr Mawhinney from leaving the country and from dealing in financial products on an interim basis. Mr Golightly said:
“Mayfair’s investment in Mission Beach and Dunk Island was a nationally significant regional community project which has been destroyed thanks to an out-of-control corporate regulator. The valuation uplift in Mayfair’s portfolio confirms ASIC grossly mischaracterised Mayfair’s business and its investments to the Federal Court of Australia, and that Mayfair’s investments were solid. ASIC had no right to take that away from nearly six hundred people like me who did their due diligence and backed the company’s strategy.
The level of incompetence and recklessness is astounding when you consider that ASIC failed to write to Mayfair expressing their concerns, failed to interview Mr Mawhinney, failed to ask for documentation about Mayfair’s plans for the region and failed to ask for financial statements. Sadly, it is clear Mayfair’s lenders did more due diligence than ASIC did and now we are suffering the consequences of ASIC’s negligence. We deserve to be compensated for nearly four years of torture and hardship this has brought upon so many innocent Australians.”
Perth-based lender Linda Roberts received a telephone call from a from ASIC’s Brisbane office in early 2020, just prior to ASIC issuing Federal Court proceedings.
“In early 2020 I was telephoned out of the blue by a young female ASIC representative from their Brisbane office fishing for information to build a case against Mayfair. I was happy with my investment at the time and liked the fact Mayfair was doing something good for the country by re-building Mission Beach and Dunk Island. The girl who rang me did not care that I was a happy client as she had clearly been instructed to target Mayfair at all costs.
I believe ASIC’s actions against Mayfair were premeditated, unwarranted and have harmed hundreds of innocent Australian retirees.”
According to ASIC filings from the receivers of the Mission Beach properties, McGrathNicol, the gross realisations from the receivership process which commenced in 2020 is more than $40 million, up from Mayfair’s purchase price of the sold properties of around $37 million, a sobering outcome for ASIC considering the assets were sold in a receivership sale.
Mayfair 101’s bridging lender, Naplend, is set to collect approximately $23 million in interest, fees and expenses on top of their $14.2 million loan facility, from the sales of properties which ASIC made out to be speculative and high risk. The receivers, McGrathNicol, are also estimated to have collected $3.5 million in fees. This means Mayfair’s investment in Mission Beach made money for everyone apart from Mayfair 101 and its noteholders, who funded the project.
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