Friday, October 7, 2011

Richard Is Fighting Back...

Here's what Richard had to say at the Halifax Club lunch yesterday, excerpts from

He accused management at Homburg Invest of mis-using the creditor protection process to protect their jobs.

“This company had lots of liquidity. It’s an abuse of the system,” said the founder of the troubled property company at a Halifax Club lunch.

“The company is not a bankrupt,” said Homburg.

“(It) is more to protect management who did not like the largest shareholder (Homburg) to take over the company and privatize it.”

Homburg was particularly critical of the annual meeting, which was held the same day as the CCAA move.

He said he had given his power of attorney to “trusted people” to vote his 46% shareholding – only to find out later that they had assigned it to “someone else.”

“Business can be war,” said the 62-year-old international financier who was careful not to name any of his adversaries, citing legal issues

After his resignation, Homburg offered $3.25 a share to take the company private. When the board turned thumbs down, he threatened a hostile bid, which he later abandoned.

Homburg Invest responded by cancelling management contracts held privately by Homburg – which has responded with a $27-million lawsuit.

Defending his privatization bid, Homburg said the gathering economic crisis and the difficulty raising money, particularly in Europe, mean Homburg Invest did not have a future as a public company.

He said he took himself out of management of Homburg Invest because he was starting a similar business and wanted to avoid conflicts. He also wanted to start succession planning.

The regulator ordered that Homburg be removed from any positions of influence, due to tax assessment issues with the Dutch government.

Yesterday, Homburg said the regulator had a problem with Homburg Invest, citing a multiple voting share set-up as one issue. Its A and B shares traded on the TSX before the CCAA-related suspension.

Homburg said the regulatory issue occurred after he divulged plans to privatize the company to top Homburg executives – nothing he has other companies which have Dutch trading licenses and there is no issue with them.

“It’s not a personal matter (with the regulator). As we said it was a company we wanted to privatize. That was a well-known plan and no one was surprised about that,” said Homburg in an interview afterwards.”

“It’s ended up going from friendly to hostile. In a hostile fight, dirt gets thrown out, similar to a political fight. It doesn’t have anything to do with whether it’s true or untrue.”

“In politics, 90% of what the opposition says is slander and not true. Well, in business it might be the same.”

Homburg, who parlayed a collection of Dartmouth rooming houses he acquired in the 1970s into a $3.5 billion real estate empire on two continents, wouldn’t comment if his hand-picked CEO and Chairman of Homburg Invest were behind the moves by the regulator.

“I want to take the high road. There’s no sense in pointing fingers and blaming people. If people fight dirty against you it doesn’t mean you have to fight dirty back. In some cases deeds are better than words,” he said.

“Let them judge later. Life is a long road.”

Then he said: “I think the parties should sit around the table and try to see if they can resolve their differences. But I won’t be part of that because I am not part of the company.”

Homburg was relaxed in a pair of slightly faded jeans and a dark sports jacket and no tie.

Looking a bit thinner than usual, he nonetheless came across with his usual ebullience.

“You see me. I am not worried. I am not upset. I feel great and I like the challenges like gives me every day,” he said.

“It’s all part of a job. No different than a politician who has a crisis in his cabinet, country or province.”

“Professionals deal with it in a pragmatic way. To me this is just in a day’s business.”

“You move on. What good does it to do hang out dirty laundry. It doesn’t benefit anybody.”

Homburg declined to reveal his net worth now Homburg Invest has become a penny stock, having once traded above $70 a share.

“You make, you lose,” he offered. He blamed the swirling controversy around him on global economic problems.

He has other privately held companies in real estate operating in 20 different countries, and own a diverse group of businesses in the Maritimes – including insurance firms, a rural Ford car dealership and hotels, plus non-real estate entities in the U.S.

“Homburg Capital still issues real estate security in Germany and the Netherlands, while we speak,” he said.

“We will sell because maybe Europeans can put things into clarity. Homburg Invest is a fund of funds.

“We did 200 funds, 200 partnerships. This is not the only partnership. There’s funds in Germany, the Netherlands, the Baltic states, and some are listed, some are not listed. Not one of those is in trouble.”

He said one of his separate funds sold property in Calgary to a Canadian pension fund, and the rate of return “was exceptional.”

He said his private air rental company is still going strong, particularly since a competitor in the Netherlands was grounded.

Homburg said he has no bad feelings about the Homburg Canada REIT changing its name to CanMarc REIT, saying it was always an option.

Homburg was the inaugural chairman of the REIT, and controls 16.4% of the units via his 46% control of Homburg Invest. Homburg Canada has about 5% of the REIT.

Homburg disputes need for creditor protection
But monitor raises concerns about company founder’s control of assets
By JOHN DeMONT Business Reporter
The Chronicle Herald
Fri, Oct 7 -

Richard Homburg lashed out Thursday at the management of Homburg Invest Inc., accusing it of abusing the powers of the Companies’ Creditors Arrangements Act in seeking protection from creditors for the company he founded.

The timing of the rare public appearance by the high-flying Dutch-born businessman was likely no coincidence.

His remarks at the Halifax Club came on the heels of a report by Deloitte & Touche Inc. that raised concerns that Homburg’s extensive control over Homburg Invest’s assets could make it hard to restructure the debt-plagued real estate investment company, which last month sought protection from creditors.

Homburg told the crowd that Homburg Invest had plenty of liquidity and didn’t need to go to court to keep creditors at bay.

"This was more for people (Homburg Invest management) to protect their own jobs," he said. "And for people who wanted to keep the company public."

Homburg owns 72.5 per cent of the voting shares in the company and has made two unsuccessful bids to privatize it.

Deloitte & Touche has a different appraisal of Homburg Invest’s condition. The company has long-term debt of $2 billion, according to the court-appointed monitor’s calculations, and its equity, which stood at $611 million at the end of 2008, was a mere $57 million as of June 30.

Furthermore, Deloitte & Touche reported, Homburg controls most of Homburg Invest’s roughly $1.5 billion in real estate assets through his company Homburg Management. That entity acts as the general partner in the many limited partnerships that hold most of Homburg Invest’s real estate assets.

Though Homburg Management is not entitled to any profits, it has full authority over what is done with those assets.

Last month, Homburg announced that he had placed his control block and voting rights in Homburg Invest in the hands of a pair of independent Dutch trustees.

But Deloitte & Touche has reservations about Homburg’s influence.

"The control exercised by the general partner and its impact on (Homburg Invest Inc.’s) restructuring process raises some concerns and is currently being analyzed by the monitor to evaluate its impact on HII and the monitor’s ability to conduct an efficient restructuring process," Deloitte & Touche said in its court filings.

The monitor also noted that Homburg Management "has been generally unresponsive to HII’s requests for the use and benefit of the partnerships."

That lack of communication may be understandable. Homburg said Thursday that he made a mistake by bringing in the wrong managers when it came time for him to step down as chairman of Homburg Invest last spring.

Since then, the board of Homburg Invest has twice rejected his takeover bids.

Homburg also owns Homburg Canada Inc., which is suing Homburg Invest for $27 million in damages over the cancellation this summer of a lucrative property and asset management agreement between the two companies.

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