Let’s talk about REX, and the narratives about saving regional routes and flogging the airline’s profitable parts ASAP.
As documents lodged with ASIC show, REX’s key lender is keeping its options open as wide as the skies the Singaporean-backed entity once sought to rule.
The Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) lodged by REX’s administrators on Wednesday reveals that the first time EY’s Sam Freeman, Adam Nikitins and Justin Walsh met with REX’s senior secured lender PAG, three restructuring specialists from Deloitte were also present.
Two of those three – Sal Algeri and Jason Tracey – are registered liquidators authorised to accept formal insolvency appointments and one – Algeri – was an appointee on the Virgin Australia voluntary administration (VA). Algeri knows aviation.
According to the DIRRI, on July 22 the administrators first met with PAG via Melbourne-based managing director Sid Khoktar, Hong Kong-based co-head of private equity and REX director Lincoln Pan and Murtaza Kahloon.
Also on hand were Algeri, Tracey and Deloitte director Daniel Linaker.
iNO’s mail is that Deloitte is advising PAG in its capacity as REX’s senior secured lender so Freeman, Nikitins and Walsh may yet find themselves relegated to the role of assetless liquidators-in-waiting if the sale process hits turbulence.
What may help the EY trio however is the depth of their relationships with Singaporean investors.
One need only recall how Freeman and EY WA colleagues Colby O’Brien and Vincent Smith were able to obtain third party releases from insolvent trading claims for various individuals linked to Singapore-based Oxley Holdings during the Pindan Group Pty Ltd VA to appreciate the value of such experience in circumstances where it’s not yet clear that REX’s board has obtained Safe Harbour protections.
When iNO spoke to Freeman yesterday afternoon he said he wasn’t aware if Safe Harbour had been sought, which is odd given the more than 20 meetings Freeman and Nikitins and other EY personal had with REX directors, their advisors and PAG representatives between May 9, 2024 when EY was first contacted by REX seeking to engage the firm to conduct an “independent business review” and the trio’s appointment as VAs last Tuesday.
So not once did any member of the board – non-executive chairman and former Parliamentarian John Sharp for instance – advise EY that a Safe Harbour Advisor had been engaged? And nobody from EY asked?
That would seem unlikely, unless of course REX’s directors have unwavering faith in the EY trio’s ability to conjure third party releases for those most likely on the hook should claims for insolvent trading or other director’s duty breaches be identified.
The EY appointees also insist in their DIRRI that there is no threat to their independence from their relationship with PAG, while confirming that EY has previously acted for staff within PAG related
organisations and undertaken formal and informal assignments on behalf of the PAG for a number of years.
No doubt they were mindful of criticisms of inadequate disclosure in respect of their Pindan DIRRI expressed by ASIC in a letter written to them in the immediate wake of that appointment.
The Australian reported today that EY trousered $520,000 for the independent business review and that ASIC had this week sounded out the EY trio about independence. There really is no greyer area.
PAG is also reportedly providing funding to maintain critical operations while the VAs prepare REX’s profitable business units for sale. If that process falters expect Algeri and Tracey to swoop in like seagulls on a chip.
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