Refund franchisees still hoping to buy business as State Home Loans deal falls through

A group of Refund franchisees are still hopeful of putting together a deal to acquire the mortgage broking business, which has been in administration since October last year.

At the same time the sale of the business to State Home Loans – announced by administrators SV Partners on February 23 – appears to have failed due to not enough franchisees willing to commit to the arrangement.

Nicolaas Wiering from Refund Home Loan Double Bay has told Property Observer he is one of the franchises working “very hard” to put a deal together.

“Things are still very quiet … but we are hopefully still among the potential buyers,” he says.

The fresh alternative attempt comes at a time that a letter has been sent to franchisees by SV Partners (and seen by Brokernews.com.au) advising them that the long mooted sale to State Home Loans "now looks unlikely to proceed".

The sale to State Home Loans required “as many franchisees as possible” to continue operating as Refund franchises and to sign a “Deed of Acknowledgement and Release”.

SV Partners has told franchisees that it is exploring other options to finalise the sale but says it needs to resolve things by the end of the week or the sale will not go ahead.

"We regret the delays and major inconvenience caused to franchisees as a result; however, we can only reiterate that we are working as hard as possible to obtain a satisfactory result for franchisees and creditors," SV Partners said.

SV Partners says another potential buyer is Independent Mortgage Professionals, a NSW-based business registered as a proprietary company on 27 January of this year.

"An amended draft contract was forwarded to IMP's lawyer on Monday 5 March 2012 encapsulating the terms [under] which we understand IMP are willing to purchase the business, and we are awaiting their confirmation of whether they can proceed on the terms proposed," the administrator said.

State Home Loans, which in late February appeared to be the forerunner to acquire the Brisbane-based mortgage broking franchise founded by Wayne Ormond, is based at 4 Railway Parade, Burwood, NSW, according to ASIC. The company received its Australian Credit Licence on January 5, 2011 under the directorship of Tina Lomonaco.

Lomonaco works for non-bank mortgage lender Royal Guardian, also based at the same address.

Royal Guardian was established as a mortgage manager and originator in August 1998 by Anthony Tomazin and provides both residential and commercial finance.

ASIC records show that State Home Loans has not yet recruited any credit representatives (loan writers) and trades under the name of First State Financial Services.

A letter sent out to creditors February 23 said a deal with State Home Loans was reliant on “as many continuing franchisees as possible to agree to operate under the franchise and to sign a deed of acknowledgement and release”.

Creditors and former franchisees who don’t sign up to a new agreement with State Home Loans will receive just 10¢ from every dollar owed under the State Home Loans proposal.

Property Observer understands that aggregator Vow Financial may also be looking at acquiring the Refund business.

Vow Financial was created by the amalgamation of three mortgage broking firms National Brokers Group, The Mortgage Professionals and The Brokerage and launched February 2010 with the backing of Macquarie Bank.

The aggregator is run by former Macquarie Bank executive Tim Brown.

Macquarie Bank Limited holds a minority interest equating to less than 20% of the Vow group with the founding aggregators, independent non-executive chairman Dr Peter Neustadt and former Vow chief executive officer Zulman holding the rest of the shares.

Vow was named wholesale aggregator of the year at the MFAA industry awards held over the weekend.

Property Observer contacted Tina Lomonaco for a comment but had not heard from her by the time of publication.