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Aussie Firms Scramble after Broker Collapse

A raft of small Australian companies caught up in the collapse of a local brokerage specialising in margin lending were scrambling on Wednesday to avoid firesales of large parcels of their shares.

The demise of Opes Prime Stockbroking amid irregularities in its client accounts forced its main creditor, Australia and New Zealand Banking Group, to start selling shares it had taken as collateral for some A$616 million ($560 million) in loans to Opes.

Companies including miners Image Resources and Gindalbie Metals as well as Australian Institute of Property Management said they were seeking orderly sales of their shares.

"This has been an unfortunate event involving one of our substantial shareholders," said Gindalbie Chairman George Jones.

"While this has been a market distraction I am pleased with the substantial interest that has been evident to acquire any available shares."

Gindalbie said about 32 million shares, or 6.2 percent of its equity would be sold after one of its shareholders lost control of ownership of its shares under an equity financing arrangement with Opes.

Image Resources said about 7.5 percent of its shares would be sold, while financial services firm Aequs Capital said Opes holds security over 11.2 percent of its shares.

Aequs said it was seeking to have the shares returned to their original owners or to an empathetic shareholder.

Several Opes clients have sought a court injunction preventing ANZ from selling the shares, but the Melbourne Federal court adjourned its decision until Thursday.

ANZ told the court on Tuesday that it had liquidated about 27 percent of its loans to Opes through share sales. Merrill Lynch was the other secured lender to Opes and both the creditors together had A$1 billion in margin loans made to Opes.

Opes Prime is the second Australian broker to run into difficulties this year amid major ructions across global markets. In January, Tricom Equities failed to meet settlement obligations and was forced to sell securities it held on behalf of clients.

Opes Prime, which employs 70 people, provides equity financing and securities lending services to institutional and private clients. Margin lending, where investors borrow money to buy stocks, has boomed in recent years as global share markets have enjoyed an extended rally.

Australian regulators are investigating Opes, which is now in the hands of receivers Deloitte. Deloitte said on Tuesday it could not yet say how much money creditors would get back.

Gindalbie shares were up 1.4 percent at A$0.72 while AIPM and Image shares were on trading halts. The broader market was up 2.7 percent.