Sell the loan before the crash; buy the land after it. That, in short, is the manoeuvre that Alceon, one of Australia’s biggest private-credit firms, is weighing amid the rubble of Bathla, the once-sprawling Sydney property developer that crumpled into administration last month. Few outfits are better placed to judge what the wreckage is worth.
According to Street Talk, the Australian Financial Review’s deal column, Alceon is assessing what is left of Bathla’s empire and is mulling whether to pick up, or lend against, the developer’s land at cents-in-the-dollar prices. Multiple people briefed on the discussions told the paper as much this week, speaking on condition of anonymity so they could talk freely.
The firm was once Bathla’s biggest financial backer. It sold out of its $460 million exposure during a refinancing deal in December — an exit that, in hindsight, looks exceptionally well timed. Bathla’s slide gathered pace only months later.
Alceon, co-founded by Trevor Loewensohn, Phil Green and Morris Symonds, brings an unusual advantage to the clean-up. It is both a lender and a developer in its own right, which means it could take control of Bathla’s stalled projects and sell them on, rather than merely holding the mortgages and waiting for someone else to do the work.
There will be plenty to choose from. Bathla was placed into voluntary administration on August 25th under the weight of almost A$3.6bn in debt, according to the Guardian, which said the insolvency advisory Teneo took control of its operations. The company blamed a “perfect storm” of declining sales, falling property prices and rising construction costs. Thousands of home buyers were left in the lurch.
The break-up has already begun, and it is being settled project by project rather than as a single rescue, as the ABC has reported. That suits distressed-asset buyers: it means no one outcome for the subcontractors and buyers caught up in the collapse, and a series of site-by-site sales in which the bidder with the best knowledge of the dirt wins.
Some will find the spectacle unlovely — a lender bailing out of a borrower just before it capsizes, then returning to sift the cargo. But someone must end up owning Bathla’s blocks, and the firm that lent against them once is arguably the one that knows most precisely what they are worth. Whether its December exit was luck or foresight, it is the buyers and tradies still owed money who had neither.