By Scott Rochfort and Kate Lahey
AS THE chief financial officer of the failed MFS group returns to court today to face questions over its collapse, his presence will also be felt in a company about to list on the stock exchange.
David Anderson is still controlling a piece of the MFS empire, as the sole director and a shareholder of MFS Alternative Asset Limited.
That company has a shareholding in the Sydney investment firm Aurora Funds Ltd. Aurora Funds will open its IPO today as part of its bid to raise $5 million for its raising.
MFS AAL is expected to hold a 6 per cent stake worth $1.3 million once Aurora lists. Mr Anderson will appear before a liquidators' examination in the NSW Supreme Court, where he has been this week on his role in MFS, which collapsed in 2008 owing creditors $2.5 billion. AAL inherited the stake when it took a 40 per cent share in the hedge fund investor Fortitude Capital. Fortitude is part of a three-way merger with Aurora Funds Management and Sandringham Capital.
The stake was purchased before the implosion of MFS in 2008.
In an apparent effort to ensure the MFS name does not stain Aurora's efforts to raise cash, the stake is held under Angstrom Assets. Angstrom Assets company was registered by Mr Anderson last month and is fully owned by AAL. Aurora's executive director, Alastair Davidson, conceded that the MFS shareholding was not something he was ''going to highlight''.
However, he admitted that Aurora had conducted due diligence on its would-be shareholder.
Mr Davidson said MFS AAL had settled its debts with its bankers and margin lenders. He dismissed rumours Mr Anderson had purchased AAL business for $1.
He said its shareholders included former senior executives in MFS.
Fortitude's managing director, John Corr, said: ''He will have no role in the float at all.''
Yesterday in court, Mr Anderson defended his role in an alleged raid of the MFS Premium Income Fund to pay a $100 million loan to Fortress Credit on November 30, 2007, saying he did not consider at the time where the money was from.
By that time, MFS had shelved plans to sell its lucrative Stella tourism group, had been refused a $450 million bank loan and was lending heavily to its New Zealand branch to help pay redemptions.
It reported a $15 million loss for the first quarter, on pre-tax earnings of $20 million, the court heard. But, the share price was ''going through the roof,'' Mr Anderson said. He denied cash flow at the time was tight, saying MFS had always had ''a range of inflows and a range of outflows''.
On November 26, Mr Anderson emailed the MFS chief executive, Michael King, thanking him for attending an Elton John concert at his polo estate the night before.
He said he knew around then an agreement with Fortress had been reached, but said it was not his role to know how it would be paid.
When colleagues later asked him for details of loans involving the Premium Income Fund, he refused to tell them because, he told the court, it was none of their business and they didn't know what they were talking about.
It did not occur to him they were referring to $100 million taken from the fund to pay Fortress. He thought they were talking about smaller loans in September that year.
Examinations by the liquidator Kate Barnet of Bentleys Corporate Recovery continue today.