Kelly Slater dealt blow as investment company falters
The Kelly Slater Wave Company has been dealt a blow with today's announcement that LM Investments has been placed into voluntary administration. LM Investments is being investigated by the Australian Securities and Investments Commission for multiple breaches of corporation law.
LM Investments is a fund manager that reportedly holds $3 billion worth of investors funds and operates in 70 countries. In a recent ABC investigation LM Investments were found to be making misleading claims about its operations and were involved in a dubious property development called Maddison Gardens at Pimpana, north of the Gold Coast. 62.5% of LM Investments entire portfolio is invested in Maddison Estate.
The land at Pimpana was bought for $89 million between 2007 and 2009. Property prices have since slumped and the ABC claims that the borrowings on Maddison Estate now amount to $240 million.
Further, there are 800 lots of land for sale at Maddison Estate which equals the entire number of lots sold on the Gold Coast last year. Not a single lot has yet been sold at Maddison Estate.
Maddison Estate has been advertised as a lifestyle housing estate with celebrities such as gardener, Jamie Durie, beach volleyballer, Natalie Cook, and swimmer, Samantha Riley, all lending their name to the venture and the various parks within the estate.
A wave pool was also planned at Maddison Estate and this where the Kelly Slater Wave Company becomes involved.
Last August LM Investments signed a Memorandum of Understanding with the Kelly Slater Wave Company to develop the world's first continuous wave pool at Maddison Estate. The Kelly Slater Wave Company has been in a first-to-market race with Webber Wave Pools and this news appeared to give the Kelly Slater Wave Company the lead.
Meanwhile, stories questioning the integrity of LM Investments and its founder, Peter Drake, were beginning to appear in the press. In May, Michael West at Fairfax called Drake, "The Scarlet Pimpernel of funds management", questioning his mysterious operations.
West followed that in October with another, more damning article. "A man with so many hats and masks can't help but be elusive" was written after unsuccessfully trying to contact Drake for many months and also researching the labyrinthine structure of LM Investments. West also began to contact investors in the fund who were being left out of pocket.
In November it appeared that, despite the negative press, LM Investments were strengthening their relationship with the Kelly Slater Wave Company. A press release was sent out stating that the company would be on site at Maddison Gardens to inspect the estate and also holding a press conference. In attendance would be Noah Grimmett, General Manager of Kelly Slater Wave Company.
Swellnet immediately emailed Grimett to ask if we could speak to him privately while he was on the Gold Coast. He promptly replied asking if we could send the press release to him, which we did. It appeared he wasn't even aware of the details within the press release.
The following day the inspection and the associated press conference at Maddison Estate were cancelled.
Earlier this month the ABC program Four Corners picked up the trail that Michael West had found and launched an investigation. In a program titled 'Betrayal of Trust' they discovered breaches in LM Investment's business practice and informed ASIC Chairman, Stephen Metcalf. "Thank you for telling me," said Metcalf on camera, "We'll take a closer look at it."
Which leads to today's news that LM Investments has been placed into voluntary administration. LM Investments maintain that, if finished, Maddison Estate would be worth between $1 billion and $1.6 billion although it's unlikely they will get the opportunity to realise that now.
Where that leaves Kelly Slater and the race to build the first continuous wave pool is anybody's guess, however today's news is a resounding setback for the 11-time world champion. Swellnet has contacted Noah Grimmett but is yet to receive a reply.
Comments
Baywatch, VSTR, and now this. No doubt about it, the boy can surf but you wouldn't seek him out for business advice.
So Kelly (or his company) signed the memorandum of understanding six months AFTER the first reports of malpractice surfaced?? I was tempted to think this was just bad luck bad that's plain careless. A quick Google search would reveal the murk surrounding LM Investments.
One of the KSWC directors is Terry Hardy, maybe he's too busy to Google search? He's has an awful lot on his plate lately.
This is all becoming quite disturbing, am I right so far in recapping,
2009, Kelly Slater and his manager fail in taking control of the world tour, with a rebel tour.
Meanwhile KS continues to be the no 1 sponsor of quicksilver, what is his sponsorship worth per yr, and considering quirks share price woes and sliding sales, how has quick retained him ? By way of giving him shares ? If so how much of the company does he own. And if he is a major share holder, minor share holder, he has a say in where quick spend their money, he owns the contest he just won
Then he starts his own wave company with the man who now owns Zosea the owner of the asp tour rites, not sure about the last one,
Now the KSWC in partnership with terry hardy/Zosea attempt a wave pool with a dodgy investment firm, bad connection, bad research, and this man is in control of the asp's future, mmm good luck with that one, but the what is worrying is KS's drive for control, all seems a bit too in house for me
The depressing fact is that this is a voluntary administration, and a deed of company arrangement is probably being put together as I write.
Instead of the legitimate purpose of giving a company breathing space to take stock and restructure, VAs are now commonly used as a tool to allow directors (in this case, a sole director) to rise from the bonfired ashes of stolen savings to con another day.
You people raise good points.
However, for a second, forget about LM investments and their bum chums at ASIC.
What I don't get is, why put a wave pool in place that has plenty of good waves?
Why not set them up in places like Perth? the waves here are well below mediocre.
? waves for the vast majority of days on the goldie are
a) very overcrowed
b) generally pretty poor.
To be entirely honest SEQ is vastly overrated for good surf and only really gets coverage because of the volume of photographers, along with the lack of secret spots to protect... (Although I'd grumble about some of the Sunny coast shots posted here).
NB: KS does NOT have significant holding is QS http://au.finance.yahoo.com/q/mh?s=ZQK
@Hungry Hippos,
Because the wave pool wasn't being built to service surfers, it was being built to, (a) help revive the lagging Gold Coast economy, and (b) turn a buck for LM Investments.
The needs of surfers may be taken into account at a later date but this was a strategic move to put a marquee entertainment park near a tourist hub.
So Kelly Slater sells his name and image to a shyster that's just ripped off institutional investors and individuals conned by his 'bank like' assurances?
Nice one Kelly, nice.
Just fucking around on the Kelly Slater Wave Company site and it says that there is 6.5 million surfers in Australia. Really? Cooly at 4ft might feel like all 6.5 million are out with you but that has to be bullshit.
That's 1 in 4. No way. So there are 1 million people in Sydney who surf?
The scary thing is I bet you the same figures are used to calculate ROE for these parks.
Kelly more and more resembles someone who reached the top and is starting to fall... I've seen this film before, many times!
Tall poppy syndrome the lot of you.
"Stuff happens"
If you counted every person who enjoys a wave in some form ,shape or method I think that 6.5m is a possible estimate. Only half or less of that might be what we each perceive or recognise as a "surfer". Spin is always there but the method of counting needs to be stated for us to understand what is meant by that.
HAHAHA. Baywatch, VSTR and now this. Cheers, mate.
In a world full of hucksters and conmen Peter Drake, the architect behind Madisson Estate, could hold his head high. It's been revealed the man who almost potted Kelly Slater's wavepool on the Gold Coast had:
-Two properties on South Straddie
-A property at Maldon, Vic
-A property on Russel Island, QLD.
-A family home at Mermaid Beach, QLD. Worth $15 million to boot!
-Property at Savisavu, Fiji
-Four cars including a Lexus and Mercedes (of course).
-Gave himself a $26 million loan.
http://www.smh.com.au/business/lm-fund-gave-loan-to-drake-20130728-2qsnp...
Actually it looks like PD's loan to himself has been upgraded - the latest SMH article reports $46 million.
And how's this: "Since the collapse in March this year, the administrators FTI Consulting have charged $2.4 million in fees, or $130,000 a week. Disbursements came to another $2 million."
Bloody hell, I am in the wrong business. $130K in weekly 'fees' plus nearly the same in 'expenses'?
http://www.smh.com.au/business/lm-frozen-funds-commissions-before-client...
Never get between a liquidator and a bankable cheque
Also, Ben, most liquidators I know think that any distribution to creditors is just an opportunity missed
That's the saddest part of all.
LM Investments made a cameo appearance last night on Media Watch. Nothing new to reveal but it's an interesting addition nonetheless.
http://www.abc.net.au/mediawatch/transcripts/s3839279.htm
"Embattled Gold Coast businessman Peter Drake has had his passport revoked and assets frozen during an ongoing investigation into the collapse of his LM Investment Management empire."
(thanks to zenagain for the heads up)
http://www.smh.com.au/business/lm-boss-peter-drakes-assets-frozen-201309...
This is Peter Drakes little bungalow on Millionaire Row, sold for a song.
Maybe Kelly snapped it up?
http://www.news.com.au/national-news/queensland/fallen-gold-coast-financ...
"Before the sale, a mannequin would be moved from room to room in an attempt to ward off burglars while the house sat empty."
They used a scarecrow to fend off the crows? Hilarious!
This all a bit of a let down, I had his marketing strategy, wave-pool usage, wave monitors and background music, travelling, moving selfie of the ride, child care, after wave-pool drinks and a small shopping mall for the little lady after lunch.
I know Pete.
I was looking forward to my Hurley fries and Quikshake post surf.
- plus we were working on the Kelly Slater Waterbed .. the ocean motion model, a night of deep and everlasting swell.
Jokes aside, if you're one of the poor gimps whose money has been hollow logged by this bastard, the link in this article should help you keep up with developments.
http://www.asic.gov.au/asic/asic.nsf/byHeadline/13-266MR%20Court%20order...
New company not a good track record BKS.
udo,
Not to worry. Apparently he's well diversified with his investments.... and still owns 65% of the GPRO shares he earned.
http://www.forbes.com/sites/ryanmac/2014/06/11/surfer-kelly-slater-looks...
Holding 73,000 shares currently @ $68 US per share.. shit that's big bucks.
The chickens are coming home to roost. Let's all pray for jail time.
https://www.asic.gov.au/about-asic/media-centre/find-a-media-release/201...
Fingers crossed, but these slimy little Octopi always seem to find a way to sqirm out of the tank. It always seems to be the naive mum and dad investors that get burnt.
True, Zen - sad but true. Let's just hope that ASIC is on its game. I know it's smarting from its recent Senate bashing. Which was well warranted.
"PETER Drake, founder of failed LM Investment Management and other directors of the funds manager have walked free after the Federal Court found them innocent of breaching their duties."
http://www.goldcoastbulletin.com.au/business/bankrupt-businessman-peter-...