Tricom Finds A Great Dane

The Age

Tuesday May 6, 2008

Vanessa Burrow, Markets Reporter

AUSTRALIA'S connections with Denmark run deep - the Danish-designed Sydney Opera House, Princess Mary and now a substantial chunk of much-diminished stockbroking company Tricom.

Danish investment bank Saxo Bank will pay $20 million for a 35% stake in Tricom, which this year caused market mayhem by not settling trades on time.

Since that time Tricom has been winding down its problematic securities lending business, and looking for a way to regain credibility.

To that end, Tricom's financiers ANZ and Babcock & Brown last month stepped in with a $30 million rescue package.

In return they received the right to buy up to 25% of Tricom within three years.

But the deal with Saxo Bank will reduce the financiers' stakes in Tricom to 7.5% each, with the remaining 50% held by Tricom founder and chief executive Lance Rosenberg and employees.

Speaking from the Opera House yesterday, Mr Rosenberg said the world changed in January, and Tricom had been forced to change with it.

"The meltdown in January affected some of our underlying collateral and we had to replenish that," he said.

The company has reduced its lending book from a peak of $2.4 billion to a little more than $200 million.

Mr Rosenberg said Tricom would exit the securities lending business as soon as possible.

Saxo Bank joint chief executive Lars Seier Christensen said the decision to buy 35% of Tricom, with the option to acquire the whole company within two or three years, was strategic.

The "bank", which specialises in online foreign exchange and currency trading, futures trading and contracts for difference (CFDs), aims to expand into Asia.

For the past five years Saxo Bank had a relationship with Tricom, through about 2000 Tricom clients who used the SaxoTrader online trading system.

"This partnership provides us a visible presence in Australia and New Zealand," Mr Christensen said, briefly alluding to the "partnership" shared by Denmark and Australia because of their mutual interest in the Sydney Opera House and Princess Mary.

Saxo Bank, which employs about 1300 people worldwide, has a heavy focus on information technology, and on developing its award-winning online trading platforms.

"We strongly believe that the future in financial markets belongs to . . . strong technology combined with high levels of service and human skills," Mr Christensen said.

Tricom retains 13 offices in Australia, New Zealand and Hong Kong. Only about 15 staff have left out of 240.

The company owes ANZ about $36 million, plus a further $168 million through the securities lending book. It owes Babcock & Brown about $37.5 million.

However, Saxo Bank will be immune from problems caused by prior dealings, including the securities lending business, because of an agreement to "ring-fence" issues of the past.

The deal must be formalised, but Mr Rosenberg said it was unlikely to dissolve like the earlier ill-fated offer from Bell Financial. "On our previous false starts the primary obstacle was the value and quantification of the liabilities," he said. "(Saxo Bank) are intricately familiar with our operations and our people."

Tricom continues to provide daily capital adequacy reports to the Australian Securities Exchange, a requirement imposed in January. However, Mr Rosenberg said he expected the requirement to be lifted by mid-May - and the remainder of a $14 million deposit returned to Tricom.

A Babcock & Brown spokeswoman said the partial sale of Tricom was "good news". "We're pretty confident we will get all our debt back in full," she said.

LINK

? To learn more about Saxo Bank, go to www.saxobank.com