A $100M MIS­TAKE

The Sunday Telegraph (Sydney) - - NEWS - BREN­DEN HILLS COURT RE­PORTER

THEY are the four floors of an apart­ment block that plunged Salim Me­ha­jer into fi­nan­cial dis­as­ter.

To his pri­vate cir­cles, the flam­boy­ant prop­erty de­vel­oper boasted he could earn tens of mil­lions of dol­lars from his high-rise devel­op­ment known as Sky­point, which tow­ers over John St in Auburn.

With Me­ha­jer seem­ingly buried in scan­dals rang­ing from crim­i­nal con­vic­tions for as­sault­ing a jour­nal­ist to elec­toral fraud — which he says he will ap­peal — the devel­op­ment was his great fi­nan­cial hope.

But Me­ha­jer made one fa­tal mis­step, re­vealed in ASIC doc­u­ments ob­tained by The Sun­day Tele­graph.

In­stead of sell­ing the apart­ments and clear­ing the $73.5 mil­lion loan he took out to fund the project, Me­ha­jer made a dis­as­trous over­reach. He de­layed the unit sales to sub­mit an­other devel­op­ment ap­pli­ca­tion to Cum­ber­land Coun­cil in the hope of adding four more storeys, the ASIC doc­u­ments said.

The coun­cil re­jected the ap­pli­ca­tion and Me­ha­jer fought the de­ci­sion in the NSW Land and En­vi­ron­ment Court, but lost again.

The doc­u­ments said in that pe­riod Me­ha­jer’s com­pa­nies de­faulted on the loan from Hong Kong-based hedge fund SC Lowy Fi­nan­cial.

In­ter­est and other penalty pay­ments had seen the debt creep up to $82 mil­lion by mid-2017.

This trig­gered a clause that al­lowed SC Lowy to or­der Me­ha­jer’s com­pa­nies to im­me­di­ately re­pay all of the debt with enor­mous penalty in­ter­est pay­ments at­tached.

The devel­op­ment saw the debt bal­loon to about $100 mil­lion once the in­ter­est was at­tached and other cred­i­tors emerged to claim they were also owed money.

The devel­op­ment and the two Me­ha­jer-re­lated com­pa­nies used to build it were put in the hands of re­ceivers Ho­gan Sprowles, which be­gan sell­ing the units to clear the debts. It is now likely that Me­ha­jer will not re­ceive a cent from the devel­op­ment once all the units are sold and cred­i­tors paid off.

He is now lan­guish­ing in jail with his bail re­fused.

His new love in­ter­est Melissa Tysoe made head­lines on Fri­day when she used so­cial me­dia to hit out at trolls who said she looked like a “she­man” and should kill her­self. “What hap­pened to hu­man­ity?” Ms Tysoe wrote on In­sta­gram.

An in­sider from Me­ha­jer’s camp said the Sky­point dis­as­ter was a mas­sive blow. “It was al­ways (as­sumed that) as soon as John St is sold, he’ll be sweet,” the in­sider said. “It was a stupid, stupid move (to de­fault on the debt).”

Ac­cord­ing to an ad­min­is­tra­tor’s re­port by Ho­gan Sprowles, the Sky­point project was com­pleted ahead of sched­ule in Fe­bru­ary 2017.

But in­stead of push­ing ahead with the unit sales, the re­port said “we un­der­stand Mr Me­ha­jer had di­rected the com­pa­nies to pro­ceed with lodg­ing a devel­op­ment ap­pli­ca­tion”, the doc­u­ment said.

SC Lowy is­sued a de­mand for $83 mil­lion on June 16, 2017, while third par­ties claimed they were owed $14 mil­lion. In its Oc­to­ber re­port to cred­i­tors, Ho­gan Sprowles es­ti­mated the debts could be as high as $116 mil­lion.

It came at a ter­ri­ble time for

Me­ha­jer. In Fe­bru­ary 2016, Auburn Coun­cil’s ad­min­is­tra­tor ef­fec­tively cost Me­ha­jer mil­lions by re­vers­ing a coun­cil de­ci­sion to sell Me­ha­jer a coun­cil carpark at 13 John St where he planned to build a block of 96 units. In Novem­ber 2015, the dis­graced for­mer deputy mayor had been banned by ASIC from be­ing a com­pany di­rec­tor.

De­spite this, the ad­min­is­tra­tors said Me­ha­jer “has acted as a shadow di­rec­tor” on the com­pa­nies be­hind the devel­op­ment and had con­trol over their bank ac­counts.

Me­ha­jer could yet face more charges as the ad­min­is­tra­tor also said in its re­port it be­lieved the prop­erty de­vel­oper had breached his “di­rec­tor’s du­ties” and should be fur­ther in­ves­ti­gated. An ASIC spokesman said the cor­po­rate watch­dog was aware of the crit­i­cism but de­clined to com­ment fur­ther.

Had Me­ha­jer be­gun sell­ing the units rather than pur­sue the devel­op­ment ap­pli­ca­tion, the ad­min­is­tra­tors es­ti­mated he could have re­duced the then $82 mil­lion debt to SC Lowy by about $58 mil­lion. If he sold the rest of the units and cleared the rest of the debts, he could have walked away with about $4 mil­lion in prof­its.

But the fi­nan­cial doc­u­ments point to Me­ha­jer drown­ing in debt, a pos­si­ble ex­pla­na­tion as to why he tried to build the ex­tra four floors.

The mat­ter has landed in the NSW Supreme Court af­ter Me­ha­jer lodged caveats on a num­ber of the units. A com­pany linked to SC Lowy has taken ac­tion to have the caveats re­moved.

Pic­ture: In­sta­gram

Salim Me­ha­jer.

The Sky­point Tow­ers devel­op­ment in Lid­combe last week. Pic­ture: Tim Hunter Salim Me­ha­jer leaves the Bur­wood Lo­cal Court on De­cem­ber 14, 2017.

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