THE three listed Rubicon property trusts are facing a final battle for survival as administrators seek to unravel the finances of their manager, which is teetering on the brink of insolvency.
A corporate restructuring specialist, Grant Thornton, will oversee the immediate futures of the American, European and Japanese funds after taking control of Rubicon Asset Management Limited (RAML), the responsible entity for each of the trusts.
But the financial domino effect that has so far accounted for the Rubicon group's ultimate parent, Allco Finance, and the two companies immediately above the trusts, Rubicon Holdings and RAML, has raised new questions about the future of the funds.
Grant Thornton has confirmed to the remaining trust investors that there will be no dividend paid on their shares for the half year that ended on Tuesday.
The focus of the trusts will be to sell what remaining properties they own in order to pay back their huge borrowings. The suspension of their security prices, which was imposed in February, will continue.
However, the precarious financial positions of Rubicon America and Rubicon Japan were the primary reasons why RAML's directors, who include the executives Gordon Fell and Matthew Cooper, called in Grant Thornton on June 19.
In a report to creditors yesterday, a joint administrator, Michael Owen, said the directors had judged that guarantees given by RAML to cover their tax obligations of $20 million could not be met by the management company if they fell due as expected. That would result in RAML becoming insolvent within three months.
Such a move would put at risk RAML's operating licence and almost certainly result in its removal as the responsible entity of the three trusts, which are its major source of revenue. They each pay management fees to it. RAML also manages five unlisted hedge funds.
Mr Owen told the meeting, which was attended by Mr Fell and his fellow non-executive director David Simpson, that he was discussing the future of RAML's licence with the Australian Securities and Investments Commission.
ASIC warned earlier this year that the company's licence could be suspended or cancelled because of possible breaches of the Corporations Act relating to its insurance cover. That factor played a part in the appointment of an administrator, Mr Owen said.
The directors have indicated the removal of RAML as trust manager and a failure to find a replacement could result in liquidators being appointed to wind them up - a prospect that looks increasingly possible given RAML's financial plight.
