Gen-Y internet entrepreneur takes on banks over toll road fiasco

A 26-year-old internet entrepreneur, Nicholas Bolton, will try to wind up BrisConnections, the company behind the $4.9 billion toll road connecting Brisbane’s CBD with its airport.

Bolton, who established domain name sales company Domain Central in 2003, owns an investment company called Australian Style Investments. Australian Style bought about 50,000 units in BrisConnections trust last year, snapping up the units for less than $50,000, and instantly becoming the trust’s largest unitholder.

But there’s a catch – under the structure of the trust, unitholders must pay $2 per unit, half of which is due in April and the remainder in January. That means Bolton owes about $96 million on his units.

Bolton is one of hundreds of small retail shareholders facing massive debts on their holdings – it appears many investors bought the units without realising they had to stump up the payments at a later date. Even $500 worth of the units, which trade at just 0.1c, come with a $1 million debt attached.

The BrisConnections float has been a disaster. After the units listed last July at $1, they have subsequently crashed to just 0.1c as the sharemarket tanked and investors grew increasingly concerned about BrisConnections debt levels and structure.

The company and its underwriters, Macquarie Bank and Deustche Bank, will have to make up any shortfall in the $780 million due in payments from unitholders. BrisConnections is currently looking at its options – including debt collectors – on how it will pursue unitholders for the payments.

Australian Style has requisitioned a special meeting to try to wind up BrisConnections. Bolton will need the support of 75% of the company’s unitholders, but he believes this can be achieved.

“We’re very confident we will get this passed,” Bolton told The Australian Financial Review.

“Our view on the register is around 90% of the unitholders and retail investors, and they’re materially concerned about the future of the company and the obligations they have.”

But BrisConnections has dismissed Bolton’s move as a “sideshow”. The company has been quick to point out that he is unlikely to get the required level of support and says winding up the company will not release unitholders from their debt obligations – it will just mean the unitholders are pursued by liquidators rather than the company itself.

Bolton’s internet company Domain Central has established itself as one of the cheapest domain name retailers in Australia, selling domain names from as low as $17.95.

In 2007 the company was ranked sixth overall in the Australian 2007 Deloitte Technology Fast 50 awards, achieving 1055% revenue growth over the previous three years.

Bolton is yet to respond to inquires from SmartCompany.