Sydney’s Sandringham Hotel in Newtown, affectionally known as The Sando to locals, will continue to play host to live music for years to come after receivers appoint by Bankwest successfully sold the property to a group of Melbourne publicans.
In a press release sent out this afternoon, receivers Ferrier Hodgson announced that the 126-year-old hotel had been sold to a new owner who had indicated an intention to run the business as a live music venue.
The sale price and the name of the purchaser were kept confidential, but according to industry sources it was sold to Tim Northeast, Matthew Everett, Richard Ludbrook, and Andrew Mansfield, who own Melbourne’s Corner Hotel and Northcote Social Club.
The pub will reportedly continue to operate in the hands of the receivers until December, at which time it will be closed for extensive renovations before reopening as the Newtown Workers Club which was announced last week.
There’s only a Facebook page to go off of at this stage, and even without announced details, the Newtown Social Club promises to “offer the same atmosphere that’s known and loved at our Melbourne venues.”
But while live music lovers will be relieved the hotel wasn’t sold to property developers and will continue to play host to hundreds of bands, the sale is a bittersweet affair for former owner Tony Townsend who was forced out of the business by his bank.
Advocacy group Unhappy Banking accused the bank of a criminal conspiracy called ‘Project Magellan’ – a program set up by Commonwealth Bank to reduce their debt risk and move marginal businesses outside their lending guidelines.The story all began back in July, when BankWest – the Western Australian bank that has since been purchased by Commonwealth – showed up at the venue without warning with the news for 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.
Even as Townsend today sees the doors shutting and the books closing, he last told Tone Deaf that he was 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,” said Townsend at the time. “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”“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 Towsend’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 earlier this month, “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.
Attempts to contact Tony Townsend today went unanswered. But despite news that the building will continue to host live music, and that the bank actually lost up to $1 million on the deal, we can’t seem to shake that bitter taste from our mouth.
