OPES Prime portfolio statements for Sarah Brown and Cardiac Jolt - the private companies linked with high-profile Sydney lawyer Chris Murphy and Opes Prime chief executive Lirim "Laurie" Emini - confirm that both men should have received a margin call in July last year.
The Opes Prime portfolio statements reveal the exact companies in which Murphy and Emini were both investing, and confirm earlier reports in BusinessDay that both men were given the generous loan value ratio (LVR) of 95%.
The statements also show that both men borrowed in excess of $167 million to buy highly speculative stocks at interests rates comparable to an average home loan.
Copies of the statements, seen by BusinessDay, were posted to Chris Murphy at his Elizabeth Street office address in Sydney, and cover the period from July 1 to 13, 2007.
One statement shows that Sarah Brown, which was co-owned by Murphy and Emini's Hawkswood Investments, had exceeded its LVR of 95%. Emini and Murphy were the sole directors of Sarah Brown.
The Sarah Brown statement shows the company's account had fallen almost $1 million into the red - it had borrowed $65,891,722.85 against a share portfolio worth $64,942,873.93. It was paying an interest rate of 7.85% on that loan.
A second Opes Prime statement for Cardiac Jolt, a company owned entirely by Murphy, shows the account was teetering on the edge of a margin call at 94.65%.
Cardiac Jolt's account for the period reveals that the company had borrowed $102,300,853.75 against shares with a market value of $108,080,937.07.
Its interest rate, on a loan exceeding $102 million, was 8.1%.
From July 13 to the collapse of Opes Prime on March 29,
the value of the ASX 200 Index plummeted by 16.25%, plunging the margin loan accounts of both Sarah Brown and Cardiac Jolt into the red, and ultimately bringing the stockbroking firm to its knees.
Melbourne finance broker Tom Karas, who has links with underworld figure Mick Gatto, told BusinessDay on the day of the Opes Prime collapse: "Chris Murphy is the black hole. Chris Murphy and Sarah Brown - that's where all the money's gone. And it's all gone
down the hole on Challenger."
Despite the poor financial state of the two portfolio accounts, both Sarah Brown and Cardiac Jolt were allowed to continue trading - amid allegations that Opes Prime staff were told not to put in a margin call to either.
The statements also suggest that Murphy was later able to increase his stakes in stocks despite being fully extended with his LVR.
On July 13 last year Sarah Brown and Cardiac Jolt had a combined holding in James Packer-controlled Challenger Financial Services Group that totalled 17.86 million shares - worth $102.71 million at the time. Challenger Financial was then trading at $5.75 a share.
A later statement to the stock exchange, dated August 2, 2007, announced that Cardiac Jolt had become a substantial shareholder in Challenger Financial on July 30, with 28.6 million shares, or 5.16% of the company. That stake was then worth $145 million.
It is believed that stake was bought with more money borrowed from Opes Prime.
Major problems with Cardiac Jolt's account are believed to have emerged on December 18 last year, when Challenger Financial's share price plunged below $5. The company last traded at $2.12.
The July 13 Opes Prime portfolio statement for Cardiac Jolt shows that Murphy also held 14.7 million shares of Australian Pharmaceutical Industries worth $29.9 million, 415,000 shares in Blackmores worth $8.7 million, 37.3 million shares in eBet worth Continued…
