The trans-Tasman battle of trustee companies – Australia’s Trustee Partners versus the owner of New Zealand’s Guardian Trust and Perpetual – has taken on a new twist, with the NZ firm’s controlling entity withdrawing from its summary judgement litigation, having been called to produce documents.
Trustee Partners, meanwhile, has three cases in the pipeline against the Kiwi roll-up, which houses the multiple trustee firms under the Complectus label. Complectus is ultimately-owned by Andrew Barnes-controlled vehicle Bath Street Capital. The legal actions are formally between Bath Street Capital-owned entity BSC Ltd and Sargon Capital, the private equity owner of Trustees Partners.
It’s getting very messy.
As previously reported, Sargon Capital, had reached an agreement to buy Complectus, which came about because of the controversial Pyne Gould Corporation’s machinations to extricate itself from Australia’s failed research firm van Eyk Research in 2015. Pyne Gould organised the finance for Barnes, who was then head of what is now InvestSmart Ltd, to buy the NZ Perpetual trustee business. In the process NZ-listed Pyne Gould sold its 36 per cent of van Eyk into the deal. Barnes fell on his sword when van Eyk went belly up but managed to hold together the NZ trustee businesses.
At least until now.
Barnes withdrew his summary judgement claim on September 7, but he is still pursuing an “underlying” claim for alleged losses due to the failed takeover, a spokesperson for Complectus said last week. The case will be heard in the Auckland High Court.
Sargon, controlled by Melbourne-based tech entrepreneur Phil Kingston, had agreed to pay a rumoured NZ$200 million for Complectus. The two companies issued a joint statement to that effect in May but less than a month later Barnes said the deal had fallen over, allegedly because Sargon “did not meet its obligations under the Sale and Purchase Agreement, while BSC Limited complied with all its obligations”.
Late in August, NZ private equity firm Direct Capital took out an option to buy half of Complectus under a new ‘refinancing agreement’. Direct Capital directors Ross George and Gavin Lonergan joined the Complectus board on August 31.
The three Sargon Capital claims now in the pipeline against Barnes are a defamation action, a claim to recover a $500,000 loan given to Barnes during the negotiations, and the fundamental breach of contract action, which both sides are disputing.
Sargon Capital is also disputing BSC’s claims over a deposit made in the takeover negotiations, alleged to be up to $50 million.
Complectus chief executive, Grant Kemble, left in June after the deal fell through.
Interestingly, Sargon Capital, which is also trying to roll-up a number of trustee companies in the Asia Pacific region, and last month announced the purchase of a Hong Kong-based firm, is expected to announce another purchase in the next couple of weeks.
Kingston declined to comment on the various actions against Barnes and Complectus last week, however, he said that Sargon Capital was well on its way developing an international trustee business to service the funds management industry in the region.
Greg Bright is publisher of Investor Strategy News (Australia)
Note: the author was a non-executive director of Pyne Gould at the time of the sale of its holding in van Eyk to interests associated with Andrew Barnes