Monday, 22 October 2018 11:42

Bankwest's debt 'enforcement default' slammed by NextDC Featured

Bankwest's debt 'enforcement default' slammed by NextDC Pixabay

Bankwest, a division of the Commonwealth Bank, has been accused of launching an "aggressive and overhanded enforcement default" in the case of Asia Pacific Data Centre, by the head of data centre operator NextDC, Craig Scroggie.

The bank demanded a payment of $29 million from APDC, which NextDC is in the process of acquiring, even though it had already agreed to the takeover in late 2017, Scroggie told iTWire. NextDC itself is worth more than $2 billion.

Bankwest's demand was first reported by Fairfax Media on Friday.

"We have certainly seen our fair share of appalling bank behaviour over the years as we have built the company from a start-up to over $2 billion, but our most recent experience with Bankwest is worthy of note," he said.

Bankwest's move came ahead of an APDC promise to pay shareholders a a special distribution of $0.02 per security on 14 November.

NextDC acquired the 67.3% APDC holding of property fund manager Tony Pitt's 360 Capital Group recently for $154.8 million. With that, NextDC owns about 98% of APDC and will gain control on 22 November.

APDC owes Bankwest the $29 million, but it has assets worth $261 million, Scroggie pointed out. Despite being backed by a superior credit party in NextDC, Bankwest still insisted on launching enforcement action against APDC, including sending NextDC a threatening legal letter in its capacity as a tenant to APDC.

When NextDC asked CBA to find out why the debt default notice had been sent, it was told that the query was being passed on to Bankwest.

"The initial response we get from the CEO of Bankwest is words to the effect of 'oh it’s not our fault we are just protecting ourselves'," Scroggie said, adding, "Are you serious?"

"Anyone would agree the self-policing of banks has been a laughable failure – they have learnt nothing," he commented. "They espouse value statements like 'Our customers are at the heart of everything we do'… 'We take ownership'. As the 1.5-star online customer reviews of Bankwest suggests, the customers beg to differ!"

iTWire contacted Commonwealth Bank for its take on the issue. A spokesperson for Bankwest said it would be inappropriate to comment at this stage as discussions between the parties involved were continuing.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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