The 17 million dollar deal

The $17 million deal

The $17 million deal

The 17 million dollar deal that could have saved doomed airfare company Bestjet

Details have emerged of a $17 million deal that could have saved online travel company Bestjet and potentially spared thousands of customers heavy losses.

A consortium claims it was in talks to buy the doomed Queensland company, five months before it collapsed, but pulled out when the operator came back to them with a list of “outrageous” demands.

A Memorandum of Understanding (MOU), signed in July last year, states the consortium would “purchase 100 per cent of the issued shares” in Bestjet Travel, Wynyard Travel, Brooklyn Travel and “associated entities” for $US12.887 million.

Read more 9Finance coverage of the Bestjet collapse here

 Michael James may have acted as a shadow director of Bestjet, the administrator alleged. (Supplied)
Sources close to the negotiations said the consortium saw huge growth potential in Bestjet, describing it as a “billion-dollar business turning over $2.5 million to $3 million a day”.

The consortium was already looking into how it could open up operations in Hong Kong, the US and Europe, sources said.

The MOU stated that the $17 million sale price was “calculated on the potential future probability and performance of the business”.

DO YOU KNOW MORE? Email reporter Rosemarie Lentini at rlentini@nine.com.au

However it has been claimed the deal fell through after Michael James, the husband of Bestjet founder Rachel James, later demanded changes to the agreement.

Mr James, a former bankrupt, acted in the position of a director or officer of Bestjet, despite not being appointed as such, the administrator Pilot Partners alleged.

In 2013, Mr James was banned from managing corporations for three years by the Australian Securities and Investments Commission (ASIC) following the $97 million collapse of his budget airline Air Australia in 2012.

Sources close to the 2018 negotiations said Mr James wanted his wife to retain control of 50 per cent of the company, but still expected the consortium to pay the full $17 million sale price.

Michael James (centre) was banned by ASIC from managing corporations for three years following the collapse of his airline, Air Australia. (Supplied)

Michael James (centre) was banned by ASIC from managing corporations for three years following the collapse of his airline, Air Australia. (Supplied)

Mr James also wanted to take Bestjet’s “associated entities” in Singapore and the Philippines out of the deal, according to sources.

“The next day, Michael James said he changed his mind. … [Seeking] a retainer of $1 million a year, to get a percentage for life, to get the full $17 million for the sale but still own 50 per cent of the company,” one source said.

Mr James was not a registered director of Bestjet, however sources claim he was heavily involved in negotiations for its sale.

Bestjet and its subsidiaries Wynyard Travel and Brooklyn Travel were placed into the voluntary administration of chartered accounting firm Pilot Partners on December 18, with over 4000 creditors left more than $10 million out of pocket.

Just six weeks before going under, the companies were acquired by Mr James’ old friend, Robert McVicker Jr of McVicker International, in a 100 per cent share transfer.

But last month, the administrator revealed that McVicker International had in fact held 50 per cent of those shares in trust for Mrs James and that there was a “Put and Call Option” agreement in place enabling Mrs James to control 90 per cent of the group of companies by 2020.

McVicker International did not acquire Bestjet’s overseas entities, including Bestjet Travel Pte Ltd and OTAlab in Singapore, the administrator said.

A source told ASIC that Michael James (right), and not his wife Rachel (left), ran Bestjet. (Supplied)

A source told ASIC that Michael James (right), and not his wife Rachel (left), ran Bestjet. (Supplied)


Amid its ongoing investigations into Bestjet’s collapse, Pilot Partners reported Mr James, Mrs James and Mr McVicker Jr to ASIC, claiming they “may have breached their obligations to act in good faith”.

An ASIC spokeswoman would not disclose if the regulator was investigating the collapse of Bestjet, only saying it was “continuing to monitor Bestjet and related companies in external administration”.

In 2017, ASIC was warned that Bestjet was being run by Mr James – and not his wife – even though ASIC had banned him from running corporations for three years over the Air Australia failure.

ASIC confirmed it did not “take further action at that time” but retained the information for “intelligence purposes”.

Bestjet was placed in liquidation on January 31, with Nigel Markey and Bradley Hellen of Pilot Partners appointed as liquidators.

The Jameses refused to comment.

DO YOU KNOW MORE? Email reporter Rosemarie Lentini at rlentini@nine.com.au

Source = Rosemarie Lentini 9Finance
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