Trustees in legal tussle over Mahogany Capital credit-linked notes
Perpetual Trustee Company has commenced legal proceedings against UK-based BNY Corporate Trustee Services over credit-linked notes issued by Mahogany Capital to 1,000 investors from Australia and New Zealand.
Grange Securities, now a wholly-owned Australian subsidiary of Lehman Brothers, sold these Mahogany notes — valued at $125 million — to the retail investors, according to a Perpetual media release.
It said the money raised was used by Mahogany to purchase credit-linked notes issued by Saphir Finance, of which BNYT acts as trustee.
Saphir used the proceeds of the relevant Saphir notes to purchase collateral to secure its obligations under a credit default swap agreement with Lehman Brothers Special Financing.
Perpetual is the current holder of the two relevant series of notes issued by Saphir.
It claims Mahogany investors are entitled to the proceeds of the collateral, ultimately backing the Mahogany notes following Lehman’s bankruptcy in September last year.
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