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Lift Capital placed into adminstration -

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Lift Capital placed into adminstration

The World Today - Friday, 11 April , 2008 12:18:00

Reporter: Peter Ryan

ASHLEY HALL: Another finance company in the risky margin lending business has collapsed under the
weight of the year's sharemarket downturn. The Sydney-based Lift Capital was placed into
administration this morning, leaving 1,600 clients worried about their money.

The firm deals in shares and managed funds, and followed a model similar to the stockbroker, Opes
Prime, which collapsed a fortnight ago.

Here's our business editor, Peter Ryan.

PETER RYAN: Rumours about Lift Capital's collapse began circulating late yesterday. And by this
morning, the firm's switchboard was in meltdown.

TELEPHONE ANSWERING MACHINE: Thank you for calling Lift Capital. Sorry we can't take your call at
this time, but please your name, phone number and message after the tone, and we will return your
call as soon as possible. Thank you.

Sorry, the memory is full. Thank you for your call. Goodbye.

(Engaged tone)

PETER RYAN: Not surprisingly, Lift Capital's 1,600 clients are keen to get some answers on the
state of their investments. That challenge is now in the hands of the insolvency firm McGrathNicol.

As administrators, they'll be scouring Lift's computer hard drives, books and archives over the
weekend to determine the extent of any losses.

But in a written statement Tony McGrath, who's perhaps best remembered as the liquidator of the
failed insurance group, HIH, is cautiously confident.

TONY MCGRATH (voiceover): It's too early to speculate on the ultimate return to creditors and
investors. However, it appears that the underlying value in the shares is good, and it's expected
that a reasonable return will be achieved.

The immediate focus will be to work closely with management and other external parties to ensure
that the value in the business is preserved.

PETER RYAN: While there's no known relationship, Lift Capital follows the stock-lending model of
the Melbourne firm, Opes Prime, which collapsed a fortnight ago.

And while there's no suggestion that the alleged irregularities being investigated at Opes Prime
are reflected with Lift Capital, the pressures of a falling sharemarket will be disturbingly
similar for some investors.

IAN RAMSAY: At this stage of course, it looks as though this particular company, Lift Capital, did
allow its clients to invest in a broad range of companies, but not as broad as Opes Prime.

PETER RYAN: Professor Ian Ramsay of the Centre for Corporate Law at Melbourne University has been
watching the fallout from the Opes Prime failure. He says the model where clients pledge securities
and property to buy shares will be ringing alarm bell for both investigators and clients.

IAN RAMSAY: Clients generally at the moment would be very concerned to be looking at the terms of
their agreement with their stockbroker, with their margin lender or their margin provider, if you
like, to ascertain the precise terms of the agreement because at the heart of the Opes Prime
litigation at the moment that's unfolding is this critical issue of the clients signing over the
legal title to their shares to Opes Prime, and those clients arguing that they actually were
misled.

PETER RYAN: In the case of Opes Prime, the first in line creditor was the ANZ Bank, and they've
rapidly sold the majority of stock invested in the firm.

Lift Capital's chief creditor is the investment bank Merrill Lynch, and they're now determine how
to exit their position. But Professor Ian Ramsay believes Merrill Lynch has a responsibility to
calm an edgy and uncertain market.

IAN RAMSAY: In a situation where if you like, there's been speculation about the financial
viability of a particular firm, then I think it is appropriate that those associated with the firm,
I'm talking about its senior executives, and also I think I'm talking about those who are
substantial investors or providers of capital, do quickly reassure the market.

And the reason I say that is that the market of course is to some degree unsettled as a result of
not just the Opes Prime collapse but generally, of course, about problems with the so-called credit
crunch here in Australia, but more particularly, of course, as we're seeing in a number of other
countries, so I think investors generally are seeking reassurance, and it's appropriate that that
reassurance be forthcoming.

PETER RYAN: Back at Lift Capital, investor calls remain unanswered and signage has been removed
from its foyer, although a special hotline and website updates have been promised.

The administrators have scheduled a creditors meeting for the 22nd of April, and they'll be working
right up to the deadline to determine how much, if anything, Lift's worried clients will retrieve
from their investments.

ASHLEY HALL: Business editor, Peter Ryan.