ASIC concerns over Interprac sale 'unfounded': Sequoia

Sequoia Financial Group says ASIC's concerns around what the sale of Interprac Financial Planning might mean for its creditors are "unfounded", while also saying it is working with ASX to determine whether shareholders are required to approve the transaction.

Earlier this week ASIC applied to the Federal Court to have receivers appointed to investigate the validity of the sale of Interprac to Conquest Investment Management. In particular, the receivers will look into the Cross Deed of Guarantee to which Sequoia, Interprac and other related entities are party. ASIC wants to know that the sale is bona fide and that the consideration price - $50,000 - is fair and reasonable.

ASIC noted its application came on the back of concerns as to what the transaction would mean for Interprac's creditors, noting two lead determinations have been made against the licensee by the Australian Financial Complaints Authority (AFCA) regarding its involvement in the Shield and First Guardian collapses.

"Sequoia believes that concern is unfounded," it stated today.

"Interprac will remain a party to the ASIC Deed of Cross Guarantee immediately following the sale of Interprac to Conquest... [and] can only cease to apply to Interprac as a result of the sale to Conquest if the directors of Sequoia certify that the sale is a bona fide sale and the consideration for the sale is for a fair and reasonable consideration. The court action by ASIC prevents such a certificate from being given."

Sequoia added that outside of the two lead determinations made by AFCA, there are so far no other liabilities that have arisen from complaints made and noted its own proceedings against AFCA in relation to the lead determination is in train. There is currently more than 900 complaints that have been made against Interprac.

The group also confirmed it is in discussions with the ASX as to whether the sale of Interprac needs to be approved by Sequoia shareholders or not.

Under ASX Listing Rule 11.2, a listed entity must seek the approval of shareholders where it is making a significant change that involves disposing of its "main undertaking", referring to key assets or businesses.

Sequoia said it expected the ASX to reach a determination this week, however the bourse has delayed providing one as it seeks further information regarding ASIC's court application. It said it is supportive of shareholder oversight, as is Conquest.

"The company remains committed to progressing the transaction in an orderly and transparent manner, consistent with its contractual obligations and regulatory requirements," Sequoia said.

Separately, Sequoia confirmed via the ASX that it has issued a formal apology to industry publication Professional Planner after its managing director Garry Crole mistook the title for another in explaining how information of the sale was able to be published ahead of a formal market announcement.

Crole admitted to speaking with a journalist from a different publication on the afternoon of Friday, March 20 and said it was with the understanding that all information discussed was under embargo until an official statement was released by the company. Sequoia claims that announcement was sent to the ASX on the Friday afternoon but was not published by the bourse until the morning of Monday, March 23.

Crole said he cannot recall which publication he actually spoke with.