In my post yesterday I listed Embedded Technologies as a creditor of Technology Business International. Embedded Technologies is another company associated with Sandro DiDonato or was on paper at least. It is now controlled by a Robert and Sharon Gallesio. It operates from the same address as other TBI and Bill Express related businesses.

Embedded Technologies is interesting because it may have played a role in supplying technology to TBI which was then leased to newsagents as part of the Bill Express package.

Not all newsagents had their marketing and other rebates stopped by Bill Express earlier this year. I have seen evidence of the company paying a rebate to a newsagent as recently as earlier this month.

Moody’s Investor Service has downgraded Mobius ELR-01 notes.  23% of the ELR-01 pool is made up of debt associated with Bill Express equipment in newsagencies. In the announcement about the downgrade, Moody’s said

The rating action follows the appointment of liquidators of Technology Business International Pty Limited (TBI) and the appointment of administrators to a related party, Bill Express Limited. TBI is one of the originators and primary services of the receivables securitised through the transaction. Moody’s also notes the further deterioration in the performance of the underlying receivables pool as well as the residual uncertainty surrounding the servicing transfer process currently taking place.

In particular, Moody’s notes the following:

– TBI was placed into liquidation on June 30, 2008 and Bill Express into administration on July 8, 2008. Bill Express is a provider of payment and transactional services to a large number of Australian newsagents. The services are available via equipment provided and leased to the newsagent obligors by TBI, with the underlying leases representing the Mobius ELR securitised pool attributable to TBI.

– The services previously provided to the obligors by Bill Express have been discontinued, rendering the computer equipment ineffective.

– While Moody’s believes the contractual arrangements to repay the equipment leases in full continue to be legally robust, there is a significant risk of non-payment or delay in payment by the underlying obligors. Any such action may result in both temporary payment shortfalls and permanent principal loss to the Mobius ELR-01 notes.

– The AUD 15.6 million TBI-associated portfolio currently represents approximately 23% of the Mobius ELR-01 pool. The rating action incorporated Moody’s views with regard to the likelihood and extent of any potential loss suffered by the transaction as the result in turn of the situation surrounding TBI and Bill Express.

So, we now know the amount of newsagent money involved – $15.6 million.  This figure, more than anything else I have published here, ought to attract attention from newsagent associations to fix such an expensive problem for newsagents.

A meeting of creditors of Technology Business International Pty Ltd (TBI) was held on July 17, 2008 at the offices of Chartered Accountants Rogers Reidy in Queen Street Melbourne. TBI is the company with which newsagents signed for the lease of equipment needed to run Bill Express.

At the time of preparation of the notice of the creditors meeting the company had five creditors, the largest being HSBC Bank Australia Limited which was owed $3.4 million. This was secured debt. Mobius Financial was listed as a secured creditor with $1 in advised debt. Charters Paper and Dueltek were listed as being owed $72,473 and $907 respectively. The final creditor was Embedeed Technologies showing as being owed $47,755. Embedded Technologies operated from the Bill Express office in Eaglemont.

On the ASIC Summary of Affairs of a Company From 509, Sandro DiDonato, Director, declared that TBI had assets of $240,829 of which $225,629 was cash at bank and $15,200 was sundry debtors. This is extraordinary for a business which signed leases a few years earlier with 3,500 newsagents for amounts of between $26,000 and $32,000 per newsagency.

Newsagents were not notified about the meeting because they were not considered creditors by the liquidator. The liquidator’s representative with whom we spoke said that “TBI had no case to answer to newsagents”. I am sure that newsagents facing months and even years of paying the TBI lease on worthless equipment would have a different view.

One can only hope that ASIC and other authorities will invest sufficient resources to uncover what really went on with TBI, Bill Express, OnQ, ETT and all o the other businesses connected with this mess.

Go to my blog post from June 28 for more information on the TBI group. That post includes this information:

• TBI is owned by Technology Business Holdings Pty Ltd (TBH) and has two Directors, one of whom is Sandro DiDonato.
• Technology Business Systems Pty Ltd (TBS) is owned by TBH and has one Director, Sandro DiDonato.
• TBH has four shareholders, the largest (96.5% of issued capital) being Equip Rentals Pty Ltd and one Director, Sandro DiDonato.
• Equip Rentals Pty Ltd was deregistered on 9 December, 2007. It had one shareholder, Sandro DiDonato and two directors, one of whom was Sandro DiDonato.

TBH and TBS remain registered with ASIC today.

Some newsagents continue to face significant difficulties in trying to establish a new ADSL connection to their business in the wake of the collapse of the Broadband connection provided through the recently collapsed Bill Express.  There are reports of ISPs refusing to establish a new ADSL connection without the permission of the previous providor.  While some newsagents have been successful in jumping this hurdle, some have not, leaving their businesses without broadband access for the moment.

This is just another impact of the collapse of Bill Express on small businesses which can ill afford the business disruption.

The loss of the Bill Express network is being talked about in Apple circles.  A report at Apple Source documents consumer frustration at not being able to get iTunes gift cards from the usual retailers.  The report is not good news for Coles, Myer, Target and JB Hi-Fi.

Meanwhile, Woolworths are making the most of their good fortune over Coles and advertising on radio that they have mobile phone recharge including Optus and Vodafone.

Newsagents have received intimidating correspondence from Mobius Financial Services Pty Limited today outlining what Mobius considers is their obligation in relation to the rental agreements around the Bill Express equipment.

The correspondence demonstrates how completely newsagents were been conned by Bill Express, those who promoted the Bill Express offer to newsagents and those on whom newsagents relied to undertake due diligence on their behalf.

While Bill Express Directors are shareholders are walking away from debts of $250 million and probably more, newsagents are set to be chased for years to pay off equipment which is useless.

How ironic?  Big business walks away and small business is left to pay millions for equipment it cannot use.  No wonder newsagents are angry.

Newsagents were presented a single package of documents when they signed up for Bill Express.  We were told that we had to sign all of these to get Bill Express in our businesses.  While the fine print might have revealed that one agreement was with Technology Business International (TBI) and another with Bill Express and that there was no relationship between the two or no common ownership structure, mopst of us trusted the representations of Bill Express, their agents and the ANF, all of whom promoted and recommended we proceed.

TBI sold the book debt to Mobius earlier this year and called in the liquidators two weeks ago.  Only then did newsagents see how much they were conned.

While Mobius will say they bought the book debt fair and square and that they are not party to the Bill Express problems, such a position is, I would hope, open to challenge.

Connect East is the new toll road in Melbourne which opened a couple of weeks ago.  On June 30, Bill Express announced that it’s merchants can accept Connect East account top ups.  We heard at the Bill Express Creditors meeting on Friday that it appears the company was trading while insolvent well before this announcement was sent out.  Bill Express collapsed just over a week later.

Our Forest Hill and Frankston newsagencies are well positioned to sell Connect East product.  Unfortunately it is an opportunity we cannot act on.  I approached Connect East two weeks ago and they advised that they will not review their top up situation for six months.  I wish they would review this sooner.

Some newsagents have expressed their concern to the ANF about the contact the organisation reported last week as having had with Mobius Financial Services Pty Limited over the Bill Express related equipment lease a arrangements.

The ANF did not seek approval from newsagents prior to making contact with Mobius.    The concerned newsagents want the ANF to cease such contact as it does not act on their behalf and has not sought their advice on this matter.

The key focus now of newsagents in the wash up of the collapse of Bill Express is the status of the Bill Express related equipment rental.  Some newsagents have as much as four years of $495 (+GST) a month to pay.  Many newsagents entered into these lease agreements with technology Business International on the recommendation and endorsement of the ANF.

Mobius, an Allco company, bought the lease book from Technology Business.  I have put some questions to the liquidator of Technology Business to see whether visibility can be gained around the agreement with Mobius.