AMID the collapse of Bill Express, it's the transfer of merchant rental agreements for their electronic billing equipment that has angered thousands of newsagents and apparently pricked the interest of the Australian Competition and Consumer Commission.
Many newsagents and merchants have been stuck with rental agreements for Bill Express equipment that no longer works.
Merchants previously rented their Bill Express terminals from Technology Business International, a company that operated from the same Eaglemont headquarters as
Bill Express and that listed Sandro DiDonato as its sole director.
With TBI in liquidation, some merchants believe they have escaped the fallout of Bill Express - but not so. On the 26th day of each month, $500 is deducted from their bank accounts for payment on equipment that brings in zero revenue.
The money is collected
by a company called Mobius Financial Services.
Many merchants have years to go on those leases - up to 40 months in a few instances - leaving them owing tens of thousands to the new owner of those rental agreements.
Months before Bill Express collapsed and TBI was put into liquidation, all of the right, title and interest of those TBI agreements with merchants were assigned to BNY Trust Company of Australia - in its capacity as trustee of the Mobius ELR-01 trust.
The deal between TBI and Mobius ELR-01 valued all those merchant leases at $15.6 million.
It seemed like a good deal for Mobius - pay a discount for the rental agreements and enjoy constant revenue streams over the next three to four years. It could then securitise those leases. But, like so much in the Bill Express saga, that deal has turned sour, and JPMorgan is the latest major institution to take a hit.
JPMorgan Trust Australia is the trustee for Mobius ELR-01 trust. It issued three classes of notes based on the $68 million of assets that Mobius ELR-01 held.
The ratings on those notes, thanks to the Bill Express debacle, have just been downgraded by Moody's, with the possibility of further downgrades to come.
The class-A notes were downgraded from Aa3 to A2, the class-B notes from Ba2 to B2 and the class-C notes from Caa2 to Ca.
All were "retained on
review for possible further downgrade".
The problem for noteholders, according to Moody's, is that the Bill Express leases made up 23% of the assets held in the Mobius ELR-01 trust, and exposure to those could prove costly.
"While Moody's believes the contractual arrangements to repay the equipment leases in full continue to be legally robust, there is a significant risk of non-payment or delay in payment by the underlying obligors," wrote Moody's in a note to clients. "Any such action may result in both temporary payment shortfalls and permanent principal loss to the Mobius ELR-01 notes."
In other words, there's a good chance angry newsagents and merchants just won't pay.
Moody's believes there is a likelihood of "loss suffered by the transaction as the result in turn of the situation surrounding TBI and Bill Express".
'Just' and 'Do' and 'It'
EIGHT little letters that created one of the world's corporate giants are celebrating a 20th birthday this week.
Advertising executive Dan Wieden came up with the
"Just Do It" slogan for Nike in 1988 after rival Reebok notched up $US877 million in sales that year to knock Nike off its perch in the US. Continued…
