City Pacific chief leaves troubled Gold Coast property financier

Phil Sullivan, founder and chief executive of debt-ridden property and finance firm City Pacific, has stood down after pressure from angry unitholders and institutional investors.

Phil Sullivan, founder and chief executive of debt-ridden property and finance firm City Pacific, has stood down after pressure from angry unitholders and institutional investors.

He will be replaced by long-time company adviser John Ellis, who has served as Sullivan’s lawyer for many years. Ellis says he is confident the company has a future and says it still has the support of its backers.

Sullivan, who founded the company 11 years ago, leaves after a shocking year for City Pacific:

– In January this year, City Pacific announced it had entered merger talks with fellow Gold Coast finance and property group MFS, although those talks were hastily abandoned and MFS later collapsed.

– In March, the company froze redemptions from the City Pacific First Mortgage fund, sparking anger among fund investors. A proposal to list the fund was postponed in October because of poor market conditions.

– In September, the company announced a net loss of $139.5 million, after writing down the value of its assets by a whopping $186 million.

The biggest question hanging over the company is its high level of debt. In late October, the company announced it had extended the terms of $235.5 million of borrowings in the City Pacific First Mortgage Fund and the listed City Pacific Limited entity until February. What happens after then is not clear.

Like so many Queensland entrepreneurs in the last 12 months, the slide of Phil Sullivan’s career and fortune has been rapid and spectacular.

In 2007, Sullivan’s fortune was listed on BRW’s Rich 200 list at $339 million, thanks mainly to his 30% stake in City Pacific. Back then, Sullivan and his company were riding high. After listing in 2001 at $1.10, the shares hit a peak of $5.39 in October 2006.

But in the last 12 months City Pacific’s shares have plummeted from $3.54 to just 12c.

New chief John Ellis told The Australian Financial Review that the company can fight through its current difficulties.

“A this stage we have the support of our backers and other stakeholders, including the majority of unitholders and shareholders. I would not have accepted this position if I did not believe the company has a future.”

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