Megafert Megascam (Part 1)

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By Dwain Duxson - An Ag Enthusiast

Megafert Megascam (Part 1) - This is the 1st part of a 2 part series that is somewhat similar to the S&W Seeds saga, except the numbers are bigger. This person who wrote this was on the receiving end, and lost several hundred thousand dollars in the deal - "Hi Dwain, Further to your article last week re S&W Seed Company Australia Pty Ltd and the NAB, the story that I can tell about the NAB and Interfert/Megafert will leave all others way behind. Interfert/Megafert had a facility with the NAB for $ 190 million, allowing Interfert/Megafert the ability to purchase large cargos of fertiliser offshore.

In March 2009, the NAB instructed McGath Nichol to do a review of the company's (Interfert/Megafert) borrowings. The report confirmed that the companies were short of equity over borrowings by $ 60 million. The NAB requested that the companies reduce this amount by $ 50 million by 31/12/2009. As the year went by, the reduction never happened, and by December 31st, the NAB had allowed the borrowings to increase to $ 139 million with only $ 27 million of stock and cash equity.

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The companies were using the stock and cash as their collateral against their loans. The ratio of borrowings had increased to $ 112 million. The NAB issued a demand on the companies on December 4th 2009, to repay or refinance their total indebtedness of $ 139 million by December 31st 2009. It was on December 23rd 2009, that the companies told the NAB they were going to presell a cargo of fertiliser. It was at this stage that the companies went on a very persuasive marketing campaign to its client and dealer network across the Southeastern corner of Australia covering southern NSW, Victoria, and South Australia.

The Farmers and dealers were never told what was going on behind the scenes. One dealer received an invoice on January 7th 2010, for $ 1.2 million with payment to the normal NAB account but seven days later was instructed to pay the same invoice into a new bank account at the Port Adelaide branch of the CBA. The NAB extended the date to January 31st to allow the companies to extend their preselling campaign to raise extra funds. One dealer was contacted three times by a company director to encourage him to purchase extra tonnage at a substantial discount". We will have part 2 tomorrow. Reply to dwaind@farmtender.com.au

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