BC3 drama ‘shocked and disappointed’ Inglis

Inglis CEO Mark Webster has issued a statement on the auction house’s credit arrangements in the wake of recent dramas surrounding BC3.

In his blog on Tuesday, Webster said it’s fair to say he was shocked and disappointed by the recent revelations relating to Bill Vlahos.  Webster added the following comments regarding the ($5 million) purchase of Black Caviar’s half brother ‘Jimmy’.

“Unfortunately, the private dealings of Vlahos have impacted on the BC3 business in which we’ve had a mutually beneficial business relationship for a number of years.

“Firstly, I would like to say that my team in Sydney and Melbourne operate in a professional and ethical manner at all times.  We aim to treat every customer with respect and dignity and, over time, we develop trust and confidence in our clients and their ability to trade and pay for their purchases.

“Of course, any person who is a new customer needs to go through the process of registering and demonstrating their credentials.  This is the same process that BC3 went through approximately five years ago when they commenced their operations, and as with all customers their status is reviewed regularly.

“BC3 has been a very good customer until now.  They have graduated from buying inexpensive horses for pin hooking in the first few years to more elite horses in more recent times, having demonstrated a good track record of paying on time.  This is the first time BC3 has defaulted and it is unfortunate for many involved noting it involves an expensive and high profile horse.

“I don’t normally discuss client terms, but for the record BC3 was given 30 day terms in relation to the purchase of ‘Jimmy’ which they did not comply with despite our warnings and attempts to recover payment.

“Many people are asking why auction companies such as Inglis provide credit.  The answer is simple, if we didn’t provide clients with reasonable credit terms our racing industry would grind to a halt as trainers and syndicators need time to on sell shares in horses.  This seems to be forgotten by many in our industry.

“In fact, a licensed syndicator needs to register a PDS with a regulator (RVL or RNSW) under ASIC rules before they can accept payment for a share in a racehorse.  This makes it impossible for a syndicator to pay for a horse on the day of purchase, and is a structural issue for our industry to review and resolve in the future if participants want to grow the ownership base and protect the size and frequency of race fields.

“The same applies for a trainer who buys horses to sell to stable clients, they need time and very few have cash on sale day.  Of course I would love every client to pay for their purchases immediately, but this is not a realistic option for most.  In the case of BC3 they were not a licensed syndicator, they purchased horses which were sold privately to their stable clients or they purchased weanlings or yearlings to improve and pin-hook as many others do.

“Inglis also guarantees to provide vendors with payment 42 days after each sale, regardless of whether their horses have been paid for by the purchaser.  This is important for vendors, many of whom are breeders and need certainty with their cash flow as small business owners.  In providing credit we take on risk which is something we review on a regular basis, but it is fair to say I’m not aware of anybody who predicted what has unfolded in recent weeks regarding the private life of Bill Vlahos.

“It is also important to recognise that our auctions create enormous economic stimulus and economic benefit for local and state economies.  In 2008, IER research determined that the Easter Yearling Sale generated $68.70 million in economic benefit for NSW, and it is important to preserve and protect a tried and proven method of selling young racehorses.  We sell approximately 6,000 horses a year at Inglis, and thankfully this type of incident with BC3 is rare.

“We are now working alongside the Administrator from Moore Stephens to on-sell 7 two year olds and one yearling that are secured as the property of Inglis.  We also hold security over ‘Jimmy’ and are in regular contact with the team of vets that are managing his welfare and treatment at the Werribee Clinic.  He is in excellent hands, he is alert and able to walk short distances with the assistance of pain relief medication.  He is suffering from laminitis, which is a cruel condition and may take some time to resolve.  The prognosis is still guarded and uncertain but rest assured he is in the best of care.”