End Of Bell Financial Takeover Talks Could Take Its Toll On Tricom

The Age

Wednesday March 19, 2008

Vanessa Burrow, Markets Reporter

RAPIDLY shrinking trading house Tricom may be left without an eligible suitor, after talks with stockbroking and financial advisory group Bell Financial broke down.

Professional investors said they doubted the ailing Tricom would attract another buyer, even though there were rumours investment bank Babcock & Brown and other unidentified parties might be interested.

Sources said several brokers were refusing to deal with Tricom, and the company's best employees were being picked off by competitors.

Tricom's lending book, which lends securities to investors to facilitate short-selling, has been reduced from about $2.4 billion in July to about $340 million as of Monday. But in a brief statement yesterday, Tricom said it had "commenced discussions with other parties" earlier this month. Those discussions were "well advanced".

Speaking for Tricom, Carden Calder, of BlueChip Communication Group, also rejected stories that staff were leaving, saying there had been no lay-offs and "minimal adviser turnover".

Bell Financial last month offered to acquire Tricom after the trading house failed to settle trades on time. That failure inspired fears that Tricom was about to collapse.

And although no figure was confirmed, Bell Financial was expected to pay only a nominal sum for Tricom while offering a capital infusion and taking responsibility for daily operations. The deal was billed as beneficial to staff and clients of Bell Financial Group and Tricom.

Yesterday Bell Financial, which said its heads of agreement had lapsed on March 7, confirmed that talks had ceased. Relieved shareholders pushed Bell Financial stock 18?, or 16.7%, higher to $1.26.

Company spokesman Nigel Kassulke, of Cannings Corporate Communication, would not say why the proposed acquisition had fallen through. But there was speculation one of Tricom's creditors, which include ANZ, Credit Suisse and Merrill Lynch, was not agreeable to the deal.

One professional investor said he expected Tricom to be dissolved rather than sold.

"I don't think anybody wants to buy Tricom," he said, on condition of anonymity.

ASX spokesman Matthew Gibbs said that since Tricom delayed settlement on its trades in January, it had complied with conditions imposed on it, including the requirement to provide a daily capital adequacy report.

PricewaterhouseCoopers has been engaged to conduct an independent review of Tricom's operations.

© 2008 The Age

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