The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Liquidators for a collapsed $471 million fund structure yesterday said they were “very concerned” about continued losses that are undermining the value of a $4-$5 million equity stake in a BISX-listed company, which they are attempting to “monetise”.

The majority 50.4 per cent interest in Premier Commercial Real Estate Investment Corporation is potentially “the most significant asset” available to long-suffering investors in the Bahamas-domiciled Olympus Univest investment fund, and its Mosaic Composite counterparty.

Yet Myles Culmer, BDO (Bahamas) director of advisory services, in replies to Tribune Business questions warned that the ability to maximise investor recoveries from this asset is being undermined by Premier’s successive, sustained losses.

The BISX-listed company, established as a real estate investment trust (REIT), revealed in its last financials that it suffered a $1.301 million net loss for its financial year to end-September 2013.

This compounded a $2.607 million net loss incurred in its 2012 financial year, taking Premier’s combined losses for the two years to near $4 million. And net shareholder equity, the portion 50.4 per cent owned by Mosaic, will have been slashed by the same amount.

Asked how worried the liquidators were about the continued value erosion of Mosaic’s equity interest in Premier, Myles Culmer replied: “Very concerned, as we have a fiduciary duty to the creditors in the liquidation.”

Two of Premier’s three wholly-owned properties (the former Caribbean Bottling headquarters in Nassau and Freeport) remain for sale, although there is better news at Freeport’s First Commercial Centre, which is “almost fully leased”.

Clifford Culmer, the senior BDO (Bahamas) accountant and partner, has been working with Canadian accountant Raymond Massi on the joint liquidations of Olympus and Mosaic for eight-and-a-half years.

Myles Culmer said: “The Mosaic joint official liquidators are continuing their efforts to work with the Board to monetise or enhance the value of Premier’s’ various real estate properties, all in an attempt to realise upon the same as well as sell the 50.4 per cent stake in the company.”

He confirmed that Mosaic’s stake in Premier was worth between $4-$5 million, adding: “In terms of realisable value, the Premier shareholding represents a very substantial portion of anticipated recoveries of Mosaic assets.”

Myles Culmer also confirmed that the First Commercial Centre was now “substantially leased”, with occupancies last year coming in at more than 80 per cent.

Further details on the Bahamian liquidators’ progress were contained in an October 2014 court report by the Canadian liquidators for another part of the Olympus empire.

“One of the most significant assets remaining in the Mosaic estate is Mosaic’s 50.4 per cent interest in Premier Real Estate Investment Corporation, a publicly traded Bahamian income trust which owns commercial real estate in the Bahamas,” the report said.

“The Mosaic joint official liquidators are continuing their efforts to work with Premier’s Board of Directors and business manger to either monetise or enhance the value of Premier’s real estate properties, all in an attempt to realise upon the same.”

The Canadian liquidator’s report added that the First Commercial Centre had been “experiencing a high vacancy rate for many years”, yet “new tenants have recently been signed and the property is almost fully leased”.

Among the key tenants is the Okyanos Heart Institute, the pioneering stem cell operation.

Yet the Canadian report added: “At this point, the timing to monetise Premier’s real estate remains uncertain.

“Based on independent appraisals of the real estate owned by Premier, the Mosaic joint official liquidators estimate Mosaic’s interest in the real estate owned by Premier to have a value of approximately $4-$5 million.”

The report also revealed that the Bahamian liquidators obtained a Supreme Court Order on August 6, 2014, approving the Olympus and Mosaic claims processes and giving them the right to reject unjustified creditor claims.

While any rejected creditors would be able to appeal these decisions, the Canadian report said it expected the Bahamian claims processes “to be completed within the next 12 months”.

Myles Culmer, though, did not confirm this timeline, telling Tribune Business that “letters of admittances and rejections have been sent to all the claimants”.

The Olympus Univest/Mosaic Composite collapse has left around 1,900 small retail investors, many of them Canadian, out of pocket with no explanation as to where most of the money went.

Among Premier’s founding directors, although he is no longer on the Board, was Stephen Hancock, president and chief executive of Cardinal International, the ex-Bahamian fund administrator for Olympus Univest, Mosaic and a number of other entities in the investment structure.

Cardinal, too, shut down at the time that Olympus Univest and its Mosaic counterparty went into court-supervised liquidation.

The two former Caribbean Bottling company headquarters were vacated after the Coca-Cola bottler, now under the ownership of a group headed by ex-banker Walter Wells, moved to its own fully-owned buildings.

Prior to Mr Wells and his group buying the business, it was owned and run by Judy Munroe and Carlton Williams. Mr Hancock is Mr Williams’ son-in-law.

The Olympus Univest/Mosaic Composite co-liquidators’ previous reports detailed how Norshield, the investment manager, placed retail investor monies into its Olympus Funds, which then invested them into the asset manager’s wholly-owned subsidiary, Barbados-based Olympus Bank.

The bank co-mingled retail investor funds with capital received from institutional investors, such as pension funds and financial institutions, placing all monies into Bahamas-based Olympus Univest.

The latter used these funds to make “substantial investments” in Mosaic, a ‘fund of funds’ structure, which invested in “both hedged and non-hedged assets”.

Mr Massi said that based on Mosaic’s last audited financial statements, as at September 30, 2003, the value of its hedged assets totalled $387 million. These asset values, though, had been inflated.

Recovering investor monies has been made difficult by “incomplete financial records, missing financial information and, in certain cases, the destruction of key books and records”.

Yet despite all this, Tribune Business is unaware of any regulatory action taken by the Securities Commission of the Bahamas over the Olympus Univest/Mosaic collapses.