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Nye Lavalle
Can anyone connect the dot leading up to the Caymans? Lack of transparacy perhaps?

Australia's Basis Capital's Alpha Fund in liquidation after subprime woes

SYDNEY (Thomson Financial) - The fall-out from the US subprime mortgage crisis has claimed its first Australian victim, with Sydney-based funds manager Basis Capital putting one of its leveraged funds into provisional liquidation, liquidator Grant Thornton said Thursday.

The fund is the Basis Yield Alpha Fund, registered in the Cayman Islands.

'At this stage we are undertaking an immediate assessment as to the financial position of the fund and any likely return to investors,' said Paul Billingham, one of three joint provisional liquidators.

'We will issue a further statement once this is clarified.'

The joint provisional liquidators have taken legal action in the US and UK to protect the remaining assets of the fund, which has invested primarily in collateralized debt obligations (CDOs).

Thornton said they have obtained an order from the High Court in London after a Cayman Islands court requested recognition of the appointment of the liquidators and assistance in protecting assets.

Basis Capital said the liquidators have applied for the Basis Yield Alpha Fund to be placed under Chapter 15 of the US Bankruptcy Code. A temporary restraining order has been granted.

It said the appointment of provisional liquidators does not extend to any other Basis Capital funds.

The Alpha Fund had more than 50 million US dollars in assets held in the US.

Last month Basis Capital appointed Blackstone Private Equity to act as financial advisor to the Basis Yield Alpha and Basis Pac-Rim Opportunity funds.

At the time it said both funds had suffered from an adverse reaction by some investment banks to the downgrading of US subprime assets and CDOs. As a result, prices were marked down, negatively affecting valuations.

Other Australian funds, including Macquarie Bank Ltd's Fortress Investments and Absolute Capital, have also said they face significant losses because of fallout from the subprime problems.

bruce.hextall@thomson.com
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