Is It Worth the Paper It's Written On?

Just came across this Unit Trust recently.  

Brisconnections Unit Trust (BCSCA) was listed on the mid of 2008 at $3.00 per stappled unit (payable in 3 instalments of $1.00). The first day of the listing saw it dropped to $0.41 cents. It is currently the cheapest share on the ASX at the lowest price possible, 0.1 cent.  

Source: ASX website

According to Brisconnection website, Brisconnection is dedicated to the successful delivery of Airport Link, Australia's largest infrastructure project. When completed in June 2012 it will be the first major motorway linking Brisbane CBD to the northers suburbs, the Airport and the Australia Trade Coast, a project that was valued at $4.8 billion.

It's certainly tempting for many investor to buy a stock at 0.1c and doubling their investment if it goes up even just 0.1 cent. However, here's the catcth.  As I mention at the start, BCSCA is a $3.00 stappled stock.  Anyone who purchase the share will also be buying a liability of $1 per share due to April 2009, and another $1 on January 29, 2010 for the shares to become fully paid. This is to say that for every $1 worth of shares an investor is buying now, she or he will be liable for $1000 repayment in April 2009 and another $1000 on January 2010.

An Australian housewife from Victoria, recently become a second largest shareholder (Queensland Investment Corporation is the largest with 10% stake) for a mere AUD 32,300. However, for this purchase, she has to cover a huge $64.6 millions in installment payments.  

I suppose investor can always sell the stake before the installment due, asuming there are buyers. This is what I can see from the market depth this morning:

Source: Suncorp Share Trade website 

There are currently NO buyers on the screen, and around 84 million shares are offered by 172 sellers at 0.1 cent. From 390 million shares on issue, that's accounted for more that 20%.

What happen if you can not pay your installment? Any investor who fails to pay the installment will be charged daily interest until the full sum is paid.  If the company determines this amount can never be paid, it can retake and sell the shares.  

And the Management isn't going to help either, here's some excerpts from Allan Kohler's interview with Brisconnection Chairman Trevor Rowe, on ABC's Inside Business: 

ALAN KOHLER: And so you’ll sue them next April if they don’t pay, is that right?

TREVOR ROWE: We will if they don’t pay in April we have an obligation under the underwriting agreement that we need to pursue the collection of any outstanding instalments, but we get the money anyway because it’s underwritten by Deutsche Bank and Macquarie Bank.

ALAN KOHLER: But you are obliged to pursue the people.

TREVOR ROWE: We are obliged to pursue people.

ALAN KOHLER: And so are you going to do that? Is in there any alternative that you’re looking at? Is there any possible alternative?

TREVOR ROWE: We have an obligation to use best efforts to recover those funds. So in a balanced way we will have to do that.

ALAN KOHLER: What will that involve? Will you put the debt collectors on to them?

TREVOR ROWE: We’ll probably have debt collectors go out and endeavour to collect it, yes.