Stricken Brisbane-based investment group Blue Sky Alternative Investments has failed to meet the conditions of a $50 million loan from US investment firm Oaktree Capital.
Blue Sky, has been under duress since the circulation of 67-page report by US activist hedge fund Glaucus, which accused the ASX-listed fund manager of fraudulently overstating its assets.
The troubled investment group has now confirmed to shareholders that it has not met its obligations to Oaktree at the end of March this year, as it posted a net loss after tax of $25.7 million for the first half of 2019.
Blue Sky is now in breach of its minimum recurring cash earnings requirement.
Under the loan agreement, failing to meet its obligations means that Oaktree has the right to accelerate the loan and call for early repayment of the facility.
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Blue Sky remains confident that the decision to accept Oaktree's offer of a seven-year loan facility was the best decision for the company at the time.
The group said accepting the deal last year at a time when it was in a “transitional state” was done to strengthen its capital and liquidity following “significant disruption”.
“These discussions have been constructive to date and remain ongoing, although agreement has not been reached with Oaktree in relation to a variation or restructure at this stage, and Oaktree has not waived the financial covenant breach, ” Blue Sky said in an ASX statement.
Blue Sky Alternatives Investments shares have since hit 20 cents after trading at peak conditions in March of last year at $11.43.
Earlier this month, Blue Sky returned to Federal Court in its ongoing battle with former employees Mike Blakeney, Nick Waters and Pat Hayden.
The company secured court orders last month to prevent the three ex-staffers from using spreadsheets and other confidential information allegedly downloaded from its database.
The investment group has also offloaded a huge inner-city development site in East Brisbane to Mosaic Property Group, where two of Blue Sky's trusts had raised investor cash to build 156 units across two eight-storey towers.