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Update (20 January 2021): A Federal Court in WA has ordered Magnolia's purported administration of The Agency will have no effect, following an application for an injunction from the targeted property company. Click here for more.
A fund associated with a former director of The Agency Group (ASX: AU1) has appointed BDO as voluntary administrators of the real estate outfit, in an attempt to recoup outstanding secured debt issued in February last year.
Magnolia Capital, which is affiliated with Mitchell Atkins who owns 16 per cent of The Agency, claims it has lost confidence in the board and the "unknown" financial position of the group.
"As such, BDO has been appointed as voluntary administrator over AU1 only, not over any subsidiaries," Magnolia said in a statement.
"This will allow for an independent review of AU1 without disrupting the trading businesses.
"Magnolia welcomes the independent advice from BDO as voluntary administrator as to the best outcomes moving forward. Such advice to be provided in the voluntary administrator's 439A report within 42 days from its appointment."
The board of The Agency is yet to formally respond, but it is understood the action is viewed by executives as an attempt to destabilise the company, and they intend to vigorously defend against the purported appointment.
The move comes just weeks after The Agency's shareholders snubbed a takeover bid from Magnolia by voting for a deal with an investment firm backed by Western Australian horse racing magnate Bob Peters.
More than 80 per cent of votes were in favour of issuing options and $5 million worth of convertible notes to Peters Investments, which intends to pay back The Agency's debt facility with Macquarie Bank.
Magnolia's takeover offer contained a condition that it would only proceed if shareholders rejected the Peters Investments tie-up. After the vote took place Atkins did not rule out pressing on with an acquisition anyway, but in a statement today Magnolia noted the appointment of BDO triggered defeating conditions for the takeover bid.
"Magnolia considers that the combination of triggered defeating conditions means it is inappropriate for that bid to proceed and has decided that it will rely on the triggered defeating conditions," the company said.
On 5 January, The Agency reported it had raised the $5 million entailed in the Peters agreement, of which $3.715 million were applied to reducing the Macquarie finance facility down to $5 million.
The Agency and Macquarie Bank thus agreed to a revised repayment date for that $5 million to 4 January 2023, while the company also repaid a loan of around $750,000 to Kalonda Pty Ltd as a trustee for the Leibowitz Superannuation Fund.
The Agency entered a trading halt this morning, followed by a suspension from trading pending an announcement.
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