Following yesterday’s news of the Save Our Sando rally being ‘sabotaged’ after it landed on the doorstep of Commonwealth Bank’s Sydney CBD headquarters, the latest chapter in the story of the Sandringham hotel’s fight for financial survival could potentially be its last as the long-winding saga looks to be coming to a tragic end.
Following the iconic live music venue going into receivership earlier this year, after the banks essentially forced the iconic live music venue out of business by raising the monthly mortgage on the venue from $14,000 to $48,000 a month, it looks like the white knight that was hoping to appear at the last minute, will fail to materialise.
The story all began back in July, when BankWest – the defunct Western Australian bank that has since been purchased by Commonwealth – showed up at the venue without warning with the news for the venue’s owner, Tony Townsend, to pay the remaining $3.6 million of the loan within a week or else both Townsend’s and The Sando’s assets would be liquidated to pay for the loan.
Then in August, The Sando partnered with advocacy group Unhappy Banking to challenge the banks with a criminal conspiracy called ‘Project Magellan’ – a program set up by BankWest after it was taken over by Commonwealth Bank to reduce their debt risk and move marginal businesses outside their lending guidelines.
Later that month, a public rally was organised as the banks denied there was any wrongdoing in their business actions concerning the iconic Sydney venue’s receivership. Nevertheless, thousands flocked to The Sando in support of the legendary pub, demonstrating a strong public outcry stocked with emotional resonance over the potential loss of another live music venue in Sydney‘s cultural scene, as another venue looked to slip away to the greedy hands of investors.
A lot of double speak went on in the wake of the rally between both sides of the battle for the venue accusing the other of bad business. Then things took a turn for the ugly when Townsend accused the bank and receivers of personally attacking his family. “My very sick sister ‘Louise’ and her secure dwellings are now under attack. As such her life is now under threat due to these arseholes’ behaviour.”
“It’s no joke this is hideous behaviour and spiteful action by Ferrier Hodgson/BankWest which was ultimately under taken to impact on me,” he continued. “This is totally unacceptable. We all need to realise Commonwealth Bank is very, very big, we are so small… Stand by us please.”
The banks however, ignored any such claims of moral malpractice and saw things somewhat differently, denying any shady practices, telling Tone Deaf that: “This customer continued to be in default throughout 2009 and 2010, including non-payment of interest on the debt and also non-payment of Land Tax to the NSW Office of State Revenue.”
“As Mr Townsend did not take the necessary steps to resolve his financial issues and following an extensive period of time working with the customer, the Bank appointed receivers in July, 2012.” Business as usual. Rather than be concerned with the very serious issue of snuffing out one of the Sydney music scene’s longest burning and brightest lights, Commonwealth was simply looking for a way to make turn around higher profits at a faster rate – no matter the cost.
Held Wednesday afternoon, the latest protest to rally support for The Sando in Sydney’s Martin Place featured a line up of Aussie rockers performing from the back of a truck – recreating the performance from the August 27 rally for the Sando; leading protestors in a singalong of The Angels classic “Am I Ever Gonna See Your Face Again” punctuated by chants for the bankers to “get fucked, fuck off”.
The timing of the rally was clearly a last ditch effort by the venue and its supporters to reach out for a financial godsend, named the ‘Eve of the Sale of the Sando’, so touted because Wednesday marked the closure of Expressions of Interest for Sydney’s Sandringham Hotel.
While TheMusic reports that Townsend made some last minute pleas to some unlikely candidates, namely Russel Crowe, The Wiggles’ Murray Cook and young business magnate David Lowy among them, but none were willing to front the investment Townsend was asking.
The embittered fight for the survival of The Sando now looks to come to a bitter end, unless Townsend and his business partners can find a partner at to invest $1 million for a 25% share of ownership, which will generate “at least” a 6% return.
“We still seek a JV partner… to get us over the line.” said Townsend, speaking to Tone Deaf at the eleventh hour. “It’s not the end of the road for the Save Our Sando cause as we have many factors to consider when the final cards are dealt.”
Of the venue’s purchase by outside investors, Townsend revealed that there had been “a number of offers” submitted to receivers, Ferrier Hodgson. “These all vary in money and what they require in terms of sale conditions,” Townsend says. “I have seen a post from a Ferrier Hodgson rep that it will take a few days to sort through the offers and make a decision.”
It looks likely however, that the house of music is looking to sing its last song and be redeveloped into apartments, Townsend’s comments based on the venue’s “best use” are how “LEP 2010 for Marrickville Council allows a 4 story development for this site retail/residential or budget residential…. A similar site up the road (200m) had 22 x 1 br units they each sold for around $400,000-$500,000 pending veranda….etc. The commercial attractiveness of this option speaks for itself.”
Even as the Sando’s owner sees the doors shutting and the books closing, he’s not willing to give up on the principle behind the venue’s imminent closure, that essentially saw Commonwealth Bank and its former lapdogs BankWest using their loan on the music venue as leverage to mislead The Sando about the increase interest rates on their default payments – which suddenly jumped from $14,000 to $48,000 a month in August of 2011.
“We are continuing in trying to get exposure to the situation, as the entire matter is still the subject of senate inquiry,” says Townsend. “A submission has just been lodged with the inquiry. We will also be seeking compensation from the bank following their actions in relation to this matter.”
Townsend also emphasises the high leverage of 65% placed when BankWest called in its facility and demanded he pay his debts within a week. Noting he was very upset by the shady dealings of Commonwealth banks and its receivers as “misleading”, accusing them of never paying their interest as “just not true.”
“Until the bank sent its letter of demand, we paid every single interest payment, the only default we had was a loan value ratio default which is a minor default,” says the venue owner.
‘Default’ being the key term that the banks have manipulated to achieve their ends, essentially referring to the venue’s EBIDT levels which were set in the loan agreement with BankWest, but also the bank’s loan value ratio – essentially the value of the loan (BankWest’s proposed $3.2 million) and the asset purchased with that loan (The Sando).
Once Towsnend’s funds had been bled dry, the banks found that this ratio did not satisfy whatever ends they were attempting to achieve, and swiftly came knocking on The Sando’s door asking for the full repayment on their enormous loan.
Why would the banks suddenly decide that a successful and established music venue that was dutifully paying what they owed was no longer a sound investment? It’s a question that’s buried at the heart of the controversy, but one the venue fought to focus on back when The Sando found solace with Unhappy Banking in early August.
The advocacy group detailed how “Mr. Townsend has had both his books and the banks action reviewed by a panel of senior business advisers.” While Townsend said, “they have told me there is no rational case for the bank acting toward me in this manner, and anomalies appear exist with the banks action.”
Those anomalies could be contributed to the Commonwealth Bank’s change in internal policies. “It appears from our initial review of the Sando case that Tony Townsend is another victim of Project Magella,” stated Unhappy Banking, “it is very complicated, but effectively we believe Commonwealth Bank reviewed the BankWest commercial loan book to clear over 1000 loans that were outside Commonwealth’s lending guidelines. They didn’t just shift the goalposts, they took them away.”
“The fight has not been a clean one,” Townsend told Tone Deaf yesterday, “as there has been a misleading use of terminology “Default” and incorrect statements by the Bank which were repeated by the receiver that have suggested that we were at fault here.”
A representative from The Sando provided Tone Deaf with detailed documentation that convincingly demonstrates that despite the bank’s claims, they had indeed been paying the hiked fees and default payments consistently until breaking point last July, when Commonwealth Bank and then-BankWest’s decided the venue had triggered something in their ‘Project Magellan’ scheme to warrant fronting to Townsend’s door and demanding the rest of the $3.2 million loan or have his assets liquidated.
Their justification? “This customer continued to be in default throughout 2009 and 2010.” Something which detailed bank statements not only disprove, but demonstrate that despite Townsend’s personal familial and financial struggles, he was honouring the bank with his dollars and his best intentions.
The Sando’s book-keeping also includes correspondence between the venue and those clutching the pursestrings, dated from May 2010 with a cheque in full payment for land tax owing for the years 2008-2010. Including a request of “consideration be given to rescind the penalty interest for the following reason. During the time the debt was accruing the trustee of the unit trust was suffering from cancer and caring for the other unit holder who had suffered a stroke. Both parties have since died and the appointed Trustee of the Unit Trust is presently bringing these affairs into order.”
The banks, blind from the dollar signs in their eyes ignored the plea and instead gunned straight for a vast hike on the interest payments. “I can assure you that this low tactic and the fact that they were prepared to include a sick member of my family in their game was taken hard,” says Townsend.
“However, one consolation was that despite the Commonwealth Bank’s use of vast resources attempting to discredit me in the eyes of the media and our supporters – they failed miserably. If anything, it galvanised support for us.”
Community spirit and public outcry go a long way in crediting attention to an important issue, but when it comes to gilding pockets – its only the morally irresponsible actions of the banks whose wallets remain filled. Unless a financial investor can answer Townsend’s call (“We’re not asking for a lot, and we’re not asking it for nothing”), it looks like its last drinks for The Sando.
“We continue to fight. It’s the 15th round and the bell has just sounded,” says Towsend, the proverbial weary David that simply couldn’t find the chink in the banks’ Goliath armour. “I’m looking for the knockout punch…”
