Mayfair 101 wines and dines executives to draw in $210m investment
Flights to Cairns, meals at a top Adelaide restaurant, and luxury resort accommodation near Far North Queensland’s Daintree were some of the tools used by Mayfair 101 executives to draw in about $210m from investors.
Now the stricken investment house, which at its peak controlled an island in the Venice Lagoon where it planned a six-star resort, as well as 130 houses and apartments in Queensland’s Mission Beach, and Dunk Island, will face off against ASIC in the Federal Court come February 15.
Despite the woes of investors, including one Adelaide retiree who says he forked out his entire $13.2m in savings investing in Mayfair 101’s products, founder James Mawhinney is still confident he can turn the investment house around.
“We signed a financing agreement a couple of months ago for an unspecified amount, we are working through that with the provisional liquidators and our lawyers and remain confident of successfully implementing our restructuring plan as originally planned,” Mr Mawhinney told The Weekend Australian from his rental apartment in Mission Beach this week.
Chief among Mr Mawhinney’s plans is to restructure a loan from senior lender Naplend, whose backers include a co-founder of Freedom Furniture, which helped finance the acquisition of about 130 properties in Mission Beach, just south of Cairns. Naplend appointed receivers McGrathNicol who put the bulk of the houses and apartments back on the market last November.
“We have to get our money back to noteholders, it will be done in a very controlled and managed fashion,” Mr Mawhinney stressed.
“The noteholders rightly deserve to be upset, we remain steadfast in our position under obviously challenging circumstances that we have taken all the appropriate steps to get it back on track.
“If our plans are allowed to go through we can see a clear pathway to getting their money back.”
According to Mr Mawhinney these steps include Mayfair 101 disallowing its winding up, the removal of McGrathNicol and provisional liquidator Grant Thornton of M101 Nominees and the reactivation of his development plans for Mission Beach and Dunk Island.
“I have spent the last seven weeks in Mission Beach, it is evident the town needs this to go through,” said Mr Mawhinney, adding that “unfortunately” ASIC had recently made an application to have his mediation plans for Mayfair 101 set aside and the case will proceed to a full trial.
During its brief life Mayfair 101 attracted a number of high-profile investors, including political parties and former Nationals senator Julian McGauran, who ploughed in about $1m and has since reportedly launched legal action in an attempt to recover his investment.
But there are other smaller retiree players who say they do not have the financial firepower to take on Mayfair 101.
The Weekend Australian spoke to several retirees this week.
One Adelaide property developer, now retired, said he invested $13.2m in Mayfair 101’s products, including $11.9m in its MCore product and $1.3m in the IPO Wealth fund because its staff were “nice people”, they offered returns of 5 per cent to 5.5 per cent, and flew him and his partner from their suburban home to North Queensland, putting them up at the luxury The Cassowary Resort near The Daintree for a party attended by around 300 people celebrating the purchase of Dunk Island.
“A vehicle picked us up at the airport and they paid for the accommodation at the best place in Mission Beach … we were there for three days,” he said. “It was all very friendly … I guess we were suckers.”
The retired property developer now believes he was Mayfair 101’s biggest investor. He received several instalments paying 5-5.5 per cent but after that the payments dried up and his contact at Mayfair 101 told him to stop calling.
Explaining how he came to invest in the company, the investor said he contacted the outfit after seeing a positive article. The next thing he knew two Mayfair 101 representatives from Melbourne and Sydney arrived in Adelaide, taking him to lunch at The George restaurant.
“They painted a glossy picture of the company.”
The investor said he could not afford to pay lawyers in an attempt to cleave some of his supposedly secured millions of dollars back.
Does he think he will get any money back?
“That’s the $64 million question, I have no idea. I got a memo recently (from the provisional liquidators) saying they did not think there was enough assets to cover the loans. I had thought there was at least something.
“The high interest rates were one thing, they put on a show at the Hyatt Hotel in Adelaide, and Mawhinney painted a pretty rosy picture. They (said) they had enough assets to pay out secured investors.
“They were nice people, I didn’t realise I was way ahead of the other investors, you don’t know.”
But not all investors are taking a passive approach to the retrieval of their investments.
A group of investors, from Cairns to Yeppoon and down to Geelong, are banding together in the hope of establishing a noteholders’ forum to institute a group or class action.
Cairns-based retired mining infrastructure worker Bruce Golightly has worked hard all his life. He invested the bulk of his life savings, some $1m in Mayfair 101, given it offered a reasonable return as well as “absolute security of my funds”.
“This in hindsight turned out to be utter and total deception,” Mr Golightly alleges, adding that he received about three payments at 6.45 per cent.
“I spent 30 years working overseas in dangerous and trying conditions in Papua New Guinea, Indonesia, Africa, India and Brazil, saving that money.
“I have had to work with armed security guards. I invested about $1m, which was a huge amount of my life savings,” said Mr Golightly, adding that he may have to return to work.
All up, Mayfair 101 raised about $210m, including about $80m for its IPO Wealth Fund, around $65m for its secured MCore Fund, and a further $65m for its unsecured MPlus Core product. It also raised about $1m from its Australian Property Bonds.