AustChoice dumps CFS
AustChoice has pulled out of its deal to acquire Consolidated Financial Services (CFS), managing director Roger Gumley has told Money Management.
AustChoice has pulled out of its deal to acquire Consolidated Financial Services (CFS), managing director Roger Gumley has told Money Management.
“We spent a lot of management time on this and engaged external consultants to look at the deal, but it was just too difficult,” he says.
AustChoice had been the only company negotiating to buy the company and the CFS operation was seen to be complementary to Gumley’s adviser business which now has almost $500 million of funds under management.
CFS has been in dispute with its planners since an aborted float late last year. A court case in the Victorian Supreme Court is still underway between the company and some of the former directors.
It is understood that most of the advisers using the CFS wrap account have now withdrawn funds from it and are no longer paying the quarterly service fee.
According the prospectus issued last year for the float of CFS, the company had guaranteed BT Portfolio Services a minimum of $150,000 in fees for the year end June 30, 2000.
The wrap had more than $100 million of funds under administration towards the end of last year.
The future of the wrap is now uncertain as this was CFS’ only major asset.
While no planners in CFS were willing to discuss their future role with the company, it is understood that one of the options being looked at is winding up the company.
According to the prospectus, there were $2.7 million of shareholders’ funds in the company at June 30, 1999, although this figure has probably been diluted in the past six months due to costs associated with the float.
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