Author: Mark Fletcher

Connect East is the new toll road in Melbourne which opened a couple of weeks ago.  On June 30, Bill Express announced that it’s merchants can accept Connect East account top ups.  We heard at the Bill Express Creditors meeting on Friday that it appears the company was trading while insolvent well before this announcement was sent out.  Bill Express collapsed just over a week later.

Our Forest Hill and Frankston newsagencies are well positioned to sell Connect East product.  Unfortunately it is an opportunity we cannot act on.  I approached Connect East two weeks ago and they advised that they will not review their top up situation for six months.  I wish they would review this sooner.

Some newsagents have expressed their concern to the ANF about the contact the organisation reported last week as having had with Mobius Financial Services Pty Limited over the Bill Express related equipment lease a arrangements.

The ANF did not seek approval from newsagents prior to making contact with Mobius.    The concerned newsagents want the ANF to cease such contact as it does not act on their behalf and has not sought their advice on this matter.

The key focus now of newsagents in the wash up of the collapse of Bill Express is the status of the Bill Express related equipment rental.  Some newsagents have as much as four years of $495 (+GST) a month to pay.  Many newsagents entered into these lease agreements with technology Business International on the recommendation and endorsement of the ANF.

Mobius, an Allco company, bought the lease book from Technology Business.  I have put some questions to the liquidator of Technology Business to see whether visibility can be gained around the agreement with Mobius.

Tower Systems today received calls from several newsagents saying their Bill express supplied broadband had shutdown. A publisher confirmed they had received twenty such calls from newsagents. The Tower support team is able to assist to ensure that magazine invoices and other business critical files are accessed for Monday.

It would appear that the operational pain newsagents will suffer as a result from the collapse is far from over.

Cuscal issued revised information for BOPO customers yesterday. They also issued a media release following the Bill Express creditors meeting saying that deposits were safe. If I heard correctly at the Bill Express creditors meeting yesterday, one account holding BOPO customer funds is currently frozen. The Administrator undertook to look into this.

The Queensland Newsagents’ Federation today issued a special bulletin to QLD newsagents advising that BOPO card holders should withdraw funds by August 15. The QNF bulletin included a helpful sign to be placed on the window. I know from my own shops that BOPO customers have many questions and are coming to newsagents with these.

Mark Hawthorne and Jesse Hogan of The Age continue their excellent coverage on Bill Express in the newspaper today with a report on yesterday’s creditors meeting.  This story has a way to go yet.

The Bill Express (and related entities) creditors meeting today was fascinating.  In barely an hour plenty was covered:

• The total indebtedness of Bill Express is $209 million.  This may increase by at least $35 million if a claim by CCH is found to be correct.
• Bill Express had 9 employees.  Can you believe that?  The rest of their employees were employed through the Technology Business.  While we knew this, I was surprised that only 9 were employed by Bill Express.
• All the equipment used to run the business including systems holding the company accounts are controlled by Technology Business.  This makes the Administrator’s job almost impossible.
• There is no cash to continue the administration. They are hoping for a Tax Office GST refund or monies to be unlocked from elsewhere so that formal administration can move forward.
• There is a serious question about whether the company was trading while insolvent. This must tb the focus of work being done within ASIC at the moment.   I’d suggest that forensic research would show this to be the case as far back as February this year, maybe before.
• There was an interesting question from a representative of Cuscal about the account holding BOPO customer’s funds being frozen.  The administrator undertook to research this and see what can be done about releasing access to the account.
• Peter McDougall asked the most interesting question on the day – was there consideration to seizing the passports of Directors!
• A committee of creditors was formed.  This is made up of Optus, Vodafone, Telstra, Cuscall, Hutchinson Telecom, ANZ, Peter MacDougall, Capital Finance, ANZ, Don MacAskill from the ANF and myself.  This committee will consider the next steps including offers from parties for parts of the business.

Talking to people after the meeting, the common question is how could such a business collapse.  It was a no-brainer.  Sure the margins on rehcarge are tight.  But manage your cash well and you will be okay.  Cash is where most of the questions about Bill Express lie.  Questionable transactions.  Money flowing overseas?  Paying for assets not registered to the company.  Taking on debt for other entites.

No wonder Bill Express’ suppliers, respected names like Optus, Vodafone and Telstra shake their heads at how what should have been a sound business crashed to a burning heap owing hundreds of millions.

The next week will probably see administrators appointed to OnQ.  Maybe ETT too, the public company 43% owned by Bill Express.  If I am right, this will be three public companies in ruin.  The question then will be where were the regulators in all this?

I am grateful to the 77 newsagents who appointed me their proxy for the meeting.  I received another 10 proxies but the form used was the ANF pre-completd proxy form so I gave these to Don MacAskill of the ANF prior to the meeting.  I received another 17 proxies too late for the meeting.

Newsagents were sent correspondence from the ANF yesterday suggesting that the organisation is acting on their behalf in relation to the lease payments for the now useless Bill Express equipment.  These are the same leases the ANF recommended newsagents sign in 2003/04.

Given that the ANF is not a party to the lease and has no agreement from Newsagents to act on their behalf in this matter at this point, I wonder what their motives are? How can they act on our behalf when we are dealing with a Group of interwoven Companies whereby many are in Liquidation, subject to ASIC, Federal Police and Corporate investigation? I will be interested to see what the legal team representing newsagents has to say about this interference by the ANF.

I am grateful to the newsagent who brought this issue to my attention.

Here is advice for newsagents on how to remove Bill Express hardware. Whether you should remove the equipment or not is a decision you need to weigh up carefully – there is a possibility the network could be running again some day.  Please note that each situation may be different. If you are not sure get a professional to remove the equipment.

• If you use the internet through Bill Express, do not remove any hardware as your internet will stop working.
• All the Bill Express hardware is normally plugged in to 1 or 2 power boards. Turn these power boards off at the power points. Test your point of sale system (all computers), make sure that all printers, all scanners and internet is all working. If anything stops working, turn the power points on and get a professional to remove the hardware.
• If only the Bill Express hardware is turned off, slide out and unplug the IBM computer box. This will have about 4 or 5 cables plugged into the back of it. Once it is completely unplugged, remove it from the counter altogether.
• With the pin pad and the printer on the counter there are 2 or 3 cables plugged into each. Unplug all the cables and remove the pin pads. Feed the cables back into the counter.
• Carefully unplug and pull out the now disconnected left over hardware and cables. Do not cut the ends off the cables. As this would be damaging the cables for which you could have some liability.

The only downside of doing this is that the screens which the Swish group made a fanfare about bringing to its network will no longer work. However, I suspect their ASX announcement was a bit of hot air. Smart newsagents are making good use of the screen and running their own in-store ads.

My understanding is that OnQ, a major shareholder in Bill Express, will slip into administration today or early next week. I’d expect this to be followed by ETT. If this happens, three ASX listed companies will have collapsed as part of the Bill Express mess. Today’s Australian Financial Review devotes a full page to the mess.  The Age also continues its excellent coverage.

The ANF bulletin sent out tonight contains disappointing and false assertions.

The ANF bulletin says: The ANF is aware of a fax that was recently distributed nationally by Tower Systems. The fax contained some misleading and false statements in relation to ANF initiatives on behalf of newsagents.

I say – the ANF bulletin publishes no information which demonstrates that what I published was false or misleading. The claim was made on letterhead from a business representing Suncorp.

The ANF bulletin says: FACT: Touch solutions began talking to the ANF and Tower Systems about providing value added services to the newsagent industry early this year.

I say – this statement is, at best, inaccurate and at worst an outright lie. Tower released the value added services through eziPass in October 2007. The ANF promoted this in its own bulletin. Why then would they try and revise history?

The ANF bulletin says: FACT: The St George help desk provides assistance to both ANF and Tower Systems.

I say – Last week St.George established a separate Tower only help desk in part to resolve the challenges of what look like competing offers – the Tower offer and the ANF offer.
The ANF bulletin says: FACT: The ANF does not receive any commission on pre paid products with Suncorp or St George.

I say – the ANF needs to declare its commission, rebate and or other revenue arrangements associated with mobile recharge, phonecard and other product sales and merchant services transacted. The above ‘fact’ statement is not helpful without full disclosure. If the ANF makes nothing and its to make nothing why are newsagents asked to nominate ANF membership.

Several months ago Don MacAskill acting CEO of the ANF called me late one evening and asked if he could promote the Tower eziPass platform to newsagents alongside an offer from St George and Suncorp in the ANF bulletin. I advised I am okay with this as long as he understands there would be no revenue for the ANF as the Tower work was being done pro bono for newsagents. He agreed. The ANF promoted eziPass in an email that went out that night and once more a few days later. That was the end of it.

Tonight’s email from the association continues its poor track record of service and transparency on Bill Express related matters. I want the ANF to act as an association and not a commercial body.

This public dispute with the ANF is not edifying for them or for me. My issue is that newsagents deserve better representation. Te ANF had a great opportunity several months ago to start afresh. It did not choose this course and has had to spend much time since defending the indefensible about Bill Express.

The ANF announced to its members on Tuesday that the ANF (acting?) CEO met with the Bill Express Administrators on Monday. They provided a Q&A about issues discussed at the meeting – suggesting they are on top of the Bill Express issues and that they have information from the Administrator. Why, then, did the ANF only discover today that they creditors meeting is to be held tomorrow? I suspect the first the ANF heard about the creditors meeting was at this blog. The Administrators letter to creditors is dated July 10. If I was meeting the Administrator Monday I would have made the claim then about newsagents being creditors.

VANA sent out a communication to newsagents today saying that newsagents should send proxies for the ANF if newsagents are owed commissions.  This is not well thought through.  Every Bill Express newsagent who has taken a bill payment between February and when the company collapsed is owed money because of the Bill Express decision to hold back bill payment money for a marketing fund.  This is different to recharge commission.

The ANF has today faxed to newsagents calling for them to vest their proxy to the ANF. I have a problem with this given the role of the ANF in promoting Bill Express to newsagents in the first instance.

Any newsagent wanting me to act as their proxy at the creditors meeting tomorrow should email me mark@towersystems.com.au. The deadline for us having the proxy form is noon tomorrow. We can arrive at the meeting with these.

Bill Express has apparently appointed Debtsec Pty Ltd to collect money from newsagents which may be owing for phone recharge product sold through the Dialtime terminals.  Debtsec has written to newsagents advising of their appointment and indicating the amount owed.  In at least one instance, the amount Debtsec has asked the newsagent to pay to them as at July 13 was taken by Bill Express from the Newsagent’s bank account four days earlier.

Click here to download a copy of the (1MB) 22 page document issued by PPB, Administrators of Bill Express. The documents include details of the creditors meeting to be held at 1pm tomorrow in Melbourne at the Marriott Hotel. Click here for a smaller file containing the proof of debt and proxy forms. I will be attending the meeting with our Financial Controller.

Newsagents are creditors of Bill Express because the company has withhed 20% of our previously agreed Bill Payment revenue to be spent on a marketing campaign which never materialised. They also withheld 10% of our revenue for administration costs which I would consider is an amount we could dispute. To calculate the amount Bill express owes you calculate the number of bills paid between February and when Bill Express died and multiply this by 20 cents.