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Wellington Capital PIF/Octaviar (MFS) PIF

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I try to follow the Pacific First Mortgage Fund as I know that there are many PIF investors with units in this fund also. I found the following article interesting::Fund chiefs chase former directors
http://www.goldcoast.com.au/article/2010/09/02/252291_gold-coast-business.html

I was talking to one of our PIF AG members this morning who attended two days this week at Darlinghurst Court House public examinations while Michael King was questioned. He was surprised there were no other PIF investors present but commented on the numerous reporters present. He said it was extremely interesting and easy to attend. The proceedings were well covered by the media this week so could not add further info. He also said it would be a perfect opportunity to talk to the press re our current situation but didn't feel confident enough himself to make a statement so for any of the PIF Sydney investors who would like some media coverage this could possibly be a good opportunity.
Great to see at least one out of 10,400 attend!!
Seamisty
 
MFS director could not remember how $250m was spent, court told
Teresa Ooi From: The Australian September 03, 2010 12:00AM

A FORMER director of failed MFS group signed for a $250 million loan but could not recall what the money was used for.

Rolf Krecklenberg, a former director of the failed property group signed for the loan from US lender Fortress Credit, a court heard yesterday.

"From time to time I would be called to act as signatory to documents as MFS was always acquiring assets -- that's the nature of its business," Mr Krecklenberg told the NSW Supreme Court. "However, I do not specifically remember what the Fortress loan was about."

MFS chief financial officer David Anderson was the other signatory to the $250m Fortress loan facility, the court heard.

Full story:http://www.theaustralian.com.au/bus...spent-court-told/story-e6frg8zx-1225913531596
 
The Jim Byrnes-advised subsidiary of a shell of the former lingerie company bidding for the MFS-founded Premium Income Fund has had another surge in acceptances from unit holder.

ALF PIF Finance disclosed yesterday that it had lifted its stake from 0.25 per cent to 0.26 per cent. At this rate, the subsidiary of ALF (aka Can Can Lingerie) is expected to gain ownership of the fund by the year 2067.

Link http://www.theage.com.au/business/up-the-hit-parade-with-a-bullet-20100902-14rs5.html
 
Hmm in it's rush to get a decision out (to as Freehills cry: put the genie back in the bottle or as Allens Arthur Robinson claim: the issues appearing "dead, buried and cremated") the High Court seems to have either not tied up all the loose ends or left a door open.

Shall try and formulate my reasoning for a later post.

The stampede to get the Client Updates out is .... [you fill in the blank]. The law firms certainly seem to be jumping for joy that the High Court has validated them and their advice to their clients - to the detriment of PIF. Not very nice of them.

http://www.aar.com.au/pubs/baf/cubafsep10.htm
http://www.blakedawson.com/Templates/Publications/x_publication_content_page.aspx?id=59827
http://www.dibbsbarker.com/publication/High_Court_Settles_Octaviar_Saga.aspx
http://www.freehills.com.au/private/6615.aspx
 
Duped said:
Hmm in it's rush to get a decision out (to as Freehills cry: put the genie back in the bottle or as Allens Arthur Robinson claim: the issues appearing "dead, buried and crenated") the High Court seems to have either not tied up all the loose ends or left a door open.

Shall try and formulate my reasoning for a later post.

The stampede to get the Client Updates out is .... [you fill in the blank].

http://www.aar.com.au/pubs/baf/cubafsep10.htm
http://www.blakedawson.com/Templates/Publications/x_publication_content_page.aspx?id=59827
http://www.dibbsbarker.com/publication/High_Court_Settles_Octaviar_Saga.aspx
http://www.freehills.com.au/private/6615.aspx
Click to expand...
Clear as mud to most of us Duped! Look forward to the 'later post'.

I see the WPIF has sold another 1,620,893 units in an off market transfer. The voting power of the WPIF is now reduced to 6.231%.


http://www.nsxa.com.au/ftp/news/021723140.PDF

Seamisty
 
http://www.theaustralian.com.au/bus...stment-group-mfs/story-e6frg8zx-1225914001515

AS Michael King cursed, joked and threw about slang before court this week, he looked every bit the small-time Gold Coast solicitor.

His hair long, and donning an open-necked shirt and necklace, in contrast to the corporate image he cultivated while pulling a $3 million salary as head of MFS, Mr King was questioned in a bid to find just when the group became insolvent.

But for many, when the investment giant he created collapsed owing $2.5 billion after a share price crash in January 2008 (after which executives renamed the group Octaviar in a futile attempt at brand-cleansing), the question wasn't why the juggernaut had failed, or precisely when, but how it had survived for so long.

MFS was created out of a Gold Coast law firm embroiled in the nationwide solicitors' mortgage broking crisis of the late 1990s.

Mr King and MFS chief executive Phil Adams were partners of Southport-based McLaughlins Solicitors until 2000, when they formed MFS from the finance arm of that firm after an industry-wide crackdown by the corporate regulator.

Law firms had traditionally invested relatively small sums of money for clients as part of a trustee role, but that practice rocketed in the 90s.

Firms were attracting investments in a bid to turn a dollar by on-lending those funds at a higher rate, most often to property developers seeking cheap debt.

The practice ultimately cost thousands of elderly Australian's much of their life savings as many of those loans soured.

Reacting to the failures and subsequent media scrutiny, the Australian Securities and Investments Commission ruled in 1999 that solicitors must form "managed investment schemes" if they were investing money on behalf of clients.

McLaughlins Financial Services became the managed investment scheme run from suburban premises at Southport that Mr King and Mr Adams steered to a $5bn-plus empire.

Much of that growth was on the back of unsophisticated investors directly targeted by the company, first in Queensland and then nationwide.

That growth was based on the aggressive pursuit of funds under management, or "FUM", as Mr Adams affectionately called the capital raised.

Speaking to The Australian in those Southport offices in early 2004, a tanned Mr Adams said the group's FUM had grown "from zero to $1.2bn" in less than 3 1/2 years.

"The products we offer appeal to the mum and dad investors. They understand the opportunities they get from our investment products and they understand what the risks are," Mr Adams said at the time.

"They're not overcomplicated investors and the fact that we have interaction daily with them gives us more opportunity to deliver investment that suits their needs."

But by 2008 it was painfully clear most investors had no idea of the risks they were exposed to.

For MFS, more funds under management meant more fees to the group, in which Mr Adams and Mr King had massive stakes, and higher executive salaries, control and power.

By September 2007, four months before the share price collapse that would ultimately seal the company's fate, MFS declared it had "at least $5.4bn" of assets under management. Further: "MFS confirms previous guidance of a target of at least $10bn of fee-paying assets under management by June 30, 2008."

The NSW Supreme Court heard on Wednesday that MFS was facing serious cashflow problems by November 2007, when Mr King met private equity firm CVC Asia Pacific in a bid to sell for $2bn MFS's recently acquired and disparate hospitality arm Stella.

According to details read out to the court, when the Stella deal fell through, Mr King proposed a $300m capital raising.

Although in the early days MFS's pursuit of funds under management was a grab for fee revenues, towards the end of its life it appears the scramble for size became a short-sighted band-aid strategy to cover growing operating shortfalls.

In its pursuit of FUM, MFS was snapping up everything from the Mount Hotham and Falls Creeks snowfields in Victoria to a travel agency franchise and a string of aquariums in Melbourne, Thailand and Korea, often paying well over the odds.

Underbidders on many of those assets were confounded as to how MFS could make the prices it was paying "stack up".

Many expressed concerns the group was far more concerned with growing the scale of the business than buying assets delivering suitable returns.

That, they warned, would lead the group to failure because it would be unable to continue making dividend payments required by investors.

Leading into the share price collapse, MFS had spent about $2.3bn buying the string of assets in the Stella group, including the Harvey World Travel franchise, the Outrigger resorts brand and the management rights to thousands of coastal holiday apartments through mergers with Gold Coast companies Breakfree and S8.

Three weeks after MFS shares collapsed from $3.19 to 99c in January 2008, down from $5 a month earlier, the group announced it had sold 65 per cent of Stella to private equity firm CVC Asia Pacific in a deal that delivered MFS $409m in cash and valued the company at just $1.53bn.

Under the deal, CVC Asia Pacific would assume $905m of debt, which was to be repaid to investment bank UBS.

But even at that heavily discounted price, CVC and UBS had apparently hugely overestimated the true value of Stella and were badly burned.

In 2008-09 the group delivered its owners a $667.1m loss.

UBS wrote off, or converted to shares, about $575m in loans to the company.

But overwhelmingly it was retail investors who were hardest hit by the collapse of MFS, and its arms and subsidiaries.

At the time of the share price collapse, the MFS Premium Income Fund froze the funds of 10,000 investors, worth a combined $770m.

Almost all of that money has been lost.
 
http://www.smh.com.au/business/bank-role-in-mfs-problems-20100903-14uk6.html

Bank role in MFS problems

Michael Evans

September 4, 2010

"THE liquidator investigating the collapse of the Gold Coast investment firm MFS has highlighted the role of investment bank UBS in the cash crisis that crippled the travel operator and financier in 2007.

...

The Swiss bank's tentacles on the deal went deeper, with UBS banker Ben Keeble quitting to join CVC, where he would be instrumental in negotiating the Stella transaction.

...

With the Stella money blocked by UBS, questions emerged about the solvency of MFS in late 2007. Mr Krecklenberg was asked if around October 2007 the critical nature of MFS's cash flow was brought to his attention. He said it was not.
He was presented with internal emails showing concerns about a $345 million cash shortfall. Mr Krecklenberg said MFS was a ''highly acquisitive business'' that ''always had facilities'' and he was confident if funding was required, Mr King and the team ''would find it''.
After hoping to sell Stella to CVC for more than $2 billion, MFS sold it for it for $400 million. UBS was involved, managing about $800 million in Stella's debt before converting it into an equity stake. MFS became Octaviar then collapsed in 2008."
 
It seems to be difficult to maintain a spirited discourse on this forum with such a dearth of news. Reading about King and Co. is rear-vision stuff. There appears to be no new development with the CA. ASIC fudges (probably waiting on the liquidator's findings - whenever that might be) while WC keeps to its usual standards of communication.

It's two years since the "65c 45c 14c" now discredited sales pitch was pushed at us at a vulnerable moment. Except for the CA, there has been little to give us any comfort. We need some positive activity to rekindle our fighting spirits.
 
selciper said:
It seems to be difficult to maintain a spirited discourse on this forum with such a dearth of news. Reading about King and Co. is rear-vision stuff. There appears to be no new development with the CA. ASIC fudges (probably waiting on the liquidator's findings - whenever that might be) while WC keeps to its usual standards of communication.

It's two years since the "65c 45c 14c" now discredited sales pitch was pushed at us at a vulnerable moment. Except for the CA, there has been little to give us any comfort. We need some positive activity to rekindle our fighting spirits.
Click to expand...

How about instructing our CA liaison Committee obtain an update to be posted here.
The amended Statement of Claim was supposed to be out some weeks ago. And while in their offices, I was told by an Associate that new action was imminent.
Regards,
 
Simgrund -

If the CA Committee doesn't want any report to be public, an idea of what progress has recently been made could be released via an AG newsletter. Let's not forget that in the end, if we succeed with the CA, we have to fork out at least 30 per cent (most probably more). We who signed up are, after all, clients.
 
Shopping centre bargains shine on the tarnished Gold Coast
Bridget Carter From: The Australian September 09, 2010 12:00AM

CIRCLE on Cavill, the Gold Coast shopping and office complex owned by the former high-flying MFS, has been put on the market.

The owner has price expectations of under $50 million, less than half its boom-time price.

Another Gold Coast shopping centre, Centro Surfers Paradise, has been withdrawn from sale after negotiations between Centro and retail billionaire John Van Lieshout to buy the property for $180m collapsed, according to market sources.

The sales campaign for Circle on Cavill -- in the hands of Ernst & Young partner Justin Walsh -- will start next week. Octaviar, which was formerly known as MFS, is currently in liquidation. It is the second former MFS-owned shopping centre on the Gold Coast to go up for sale this year.

The nearby Christopher Skase-developed Marina Mirage that MFS once held was on offer in April, but was later withdrawn from the market and placed in receivership by St George Bank when its current owners were unable to secure a buyer for about $90m. MFS purchased the Circle on Cavill asset in 2006 as part of its Sunleisure Property Holdings acquisition from Sunland for more than $100m.

The complex includes A-grade office space and 12,300sq m of retail anchored by an IGA supermarket and includes a Strike Bowling alley. It includes open-air restaurants and cafes.

McVay Real Estate and CB Richard Ellis will be marketing the property. The restaurant Pearl had left the complex and there was office space vacant.

Sam McVay of McVay Real Estate said deals were being finalised to improve occupancy. "I think people have realised that the Gold Coast has been hit harder than most markets in Australia and definitely bottomed out," Mr McVay said. Yesterday, Centro would not comment on speculation investors in Centro Surfers Paradise shopping centre had retained the asset because it had not attracted a high enough offer.

The Gold Coast's Marina Mirage is in the hands of the receivers David Winterbottom and Martin Madden of KordaMentha.

The centre was purchased by the MFS Diversified Trust for $28.4m in 2005. It sold in the same year to Fenix, then known as Ticor Developments, for $40m. Fenix is run by Steve Moss.

Built in 1988, the Marina Mirage has 11,942sq m of floor space over four levels on a 1.88ha site on the Southport Spit.

Being 3.5km from Surfers Paradise, it adjoins the Palazzo Versace Resort and is opposite the Sheraton Mirage. The centre ran into financial difficulty after renovations over the past two years, which were believed to have cost about $30m.

Also on the Gold Coast, Homeworld Helensvale, and its surrounding development land, was placed on the market with price expectations of more than $80m. The property was not distressed and is understood to have received strong interest


http://www.theaustralian.com.au/bus...ished-gold-coast/story-e6frg9gx-1225916079298
 
SO WHERES OUR MONEY JENNY?????Doors now open at Chifley Wollongong
Thursday, 2 September 2010

General Manager Chifley
Wollongong, Adrian Teh

Constellation Hotels has set a new benchmark for hotel accommodation and conferencing on the NSW South Coast, opening the new Chifley Wollongong today.

Located on Wollongong's foreshore and adjacent to WIN Sports and Entertainment Centre, Chifley Wollongong boasts 168 guest rooms and executive suites, 140 seat restaurant with alfresco dining, lobby bar, mezzanine business lounge, heated lap pool, gymnasium, and 9 conference and function rooms catering for up to 500 people theatre style.

Chifley Wollongong offers business and leisure travellers visiting the region a newly built, superior quality hotel that is just minutes walk from City Beach, Wollongong Golf Course and CBD, while enjoying the hotel's stylish accommodation and conference facilities and state-of-the-art communication technologies.

Constellation Group General Manager Jonathan Wooller said Chifley's newest hotel would quickly establish itself as an integral part of the Wollongong business community.

"As well as delivering a new, high-quality hotel that corporate travelers are looking for, Chifley Wollongong will provide a fresh option for leisure travellers and MICE delegates attracted to one of the state's most popular short break and residential conference destination," Wooller said.

"At the same time, the hotel will meet the needs of surrounding businesses by offering a modern and relaxing restaurant and bar for social occasions, and an extensive function centre that caters for everything from conferences and meetings, to weddings and up-market special events for up to 500 people."

Chifley Wollongong's rooms and suites feature high-speed broadband internet, entertainment system, in-room safe, 40 inch flat screen TV with remote audio, free to air digital TV, and high definition movies, sport and news.

Executive rooms also offer a private balcony or terrace with view over the city.

A dedicated business lounge is located on the lobby's mezzanine level offering complimentary wireless internet access.
 
Below article is VERY interesting. Another senate enquiry?? I am sure there will be many more considering legal action against ASIC for lack of early intervention!! Seamisty


ASIC's powers under threat Adele Ferguson
September 11, 2010
http://www.theage.com.au/national/asics-powers-under-threat-20100910-15510.html

AUSTRALIA'S corporate watchdog ASIC is set to lose its powers to regulate the insolvency industry after a Senate inquiry raised concerns about its competency and effectiveness.

A report, to be released on Tuesday, is expected to recommend that a new industry-specific regulator be set up to handle personal bankruptcies and corporate insolvencies.

The report, which follows a Senate inquiry into the insolvency industry, is also expected to recommend a flying squad with powers to investigate complaints against liquidators.

After collapses including ABC Learning, Opes Prime, Fincorp, Storm Financial and Sonray, an examination of the Australian Securities and Investments Commission during the inquiry showed it had been too slow to act on complaints.

In the case of disgraced liquidator Stuart Ariff, it took ASIC two years to ban him as a liquidator and three years to charge him with fraud after his conduct was first raised in the media. Victims had lodged complaints with ASIC dating back to 2005.

Many of Ariff's victims are considering a class action against ASIC for failing to act quickly, which they say cost them millions of dollars.

Other recommendations are expected to include opening the industry to competition so that lawyers will also be able to handle liquidations. But liquidators will have to be licensed.

The new regulator would be given greater clout, with powers to audit liquidators annually and suspend them with a phone call until an investigation proves them innocent.

The recommendations, if passed into legislation, would have a profound impact on the industry and its regulation.

Government sources said that, under the current federal government, any sensible recommendations would be readily introduced and passed into legislation. The independent MPs have indicated they want to fight corruption and improve transparency.

Nationals senator John Williams, who initiated the inquiry, refused to comment on the report. He said he had called for the inquiry because of concerns about corruption in the industry. Senator Williams said there should be a royal commission on white-collar crime in Australia.

''When I am told about wrongdoings by banks, liquidators, solicitors and auditors, it makes me more convinced that we should have a royal commission into white-collar crime,'' he said. ''I have been told of many actions of wrongdoings. If white-collar crime is systemic in Australia then it should be brought to an immediate halt, and a royal commission with wide-ranging terms of reference would be the best way to do this.''

The Senate inquiry is also expected to address the fees that liquidators charge for liquidations, receiverships and administrations. There have been complaints about the size of the fees and the time it takes liquidators to complete jobs. For instance, Ansett and HIH Insurance Group, which collapsed almost a decade ago, are still in liquidation, with liquidators making tens of millions of dollars in fees.

In Australia, company insolvencies fall under the Corporations Act and are monitored by ASIC; personal bankruptcies have a dedicated Bankruptcy Act and a separate regulator, the Insolvency and Trustee Service Australia; and failed co-operatives fall under the Department of Fair Trading and a separate piece of legislation.

A major benefit of having one piece of legislation and a dedicated regulator monitoring all types of insolvencies would be that such a body would better understand the industry because that is all it would do.

ASIC declined to comment until after the report is released on Tuesday. However, ASIC chairman Tony D'Aloisio told the inquiry the powers should stay with the commission.

''We think that the way it is structured, with the Corporations Law aspects and the liquidators and insolvency practitioners we are talking about, it does logically fit within ASIC's role,'' he said.

''ASIC is the oversight body for a whole range of gatekeepers - auditors, accountants, boards, CEOs, financial officers and so on - from the birth to death of corporations … I do not think that by separating in that way you will get improved results, because improved results are going to go with the expertise that is needed to handle complex groups and investigations.''
 
A bit more interesting reading::
Jim Byrnes Adele Ferguson
September 11, 2010 http://www.theage.com.au/national/jim-byrnes-20100910-1551c.html


BIG Jim Byrnes has been bankrupt, served time in prison for the deemed supply of heroin, been banned by ASIC from running companies and had a judge accuse him of having a notorious reputation as a standover man and associate of major criminals.

He is also a former financial adviser to Alan Bond, and a business associate of liquidator Andrew Wily. Wily introduced Byrnes to work on the BACF group and recommended he sit on the committee of inspection, even though Byrnes was not a creditor.

It was around this time Byrnes got into trouble with the law when he went to the offices of Ian Lazar's lawyer Hector Ekes and put a baseball bat through the window. Ekes's office adjoined Wily's, with a door connecting them. Byrnes was sentenced to jail for four months over this matter but had the term reduced to a good behaviour bond.
BANNED lawyer Leon Nikolaidis, who was sentenced to jail in 2007 for falsifying documents, was the solicitor of choice in many of liquidator Andrew Wily's cases.

Nikolaidis's reputation for overcharging was first raised in NSW Parliament in 2001 by MP Peter Breen, who referred to him as someone who had been investigated for at least eight years and ''anyone who asks Leon Nikolaidis to undertake legal work does so at his or her peril''.

The biggest show of loyalty was Wily's appointment of Nikolaidis as his solicitor for the BACF group of companies when Nikolaidis was on bail awaiting a retrial. Wily paid him $2.6 million for his work on BACF and related entities.

After four retrials, Nikolaidis was found guilty. In March this year he was struck off as a lawyer in the NSW Court of Appeal on the grounds he was not a fit and proper person.



Also related to above article:
http://www.smh.com.au/business/too-big-for-the-police-to-handle-20100910-15532.html
 
seamisty said:
A bit more interesting reading::
Jim Byrnes Adele Ferguson
September 11, 2010 http://www.theage.com.au/national/jim-byrnes-20100910-1551c.html


BIG Jim Byrnes has been bankrupt, served time in prison for the deemed supply of heroin, been banned by ASIC from running companies and had a judge accuse him of having a notorious reputation as a standover man and associate of major criminals.

He is also a former financial adviser to Alan Bond, and a business associate of liquidator Andrew Wily. Wily introduced Byrnes to work on the BACF group and recommended he sit on the committee of inspection, even though Byrnes was not a creditor.

It was around this time Byrnes got into trouble with the law when he went to the offices of Ian Lazar's lawyer Hector Ekes and put a baseball bat through the window. Ekes's office adjoined Wily's, with a door connecting them. Byrnes was sentenced to jail for four months over this matter but had the term reduced to a good behaviour bond.
BANNED lawyer Leon Nikolaidis, who was sentenced to jail in 2007 for falsifying documents, was the solicitor of choice in many of liquidator Andrew Wily's cases.

Nikolaidis's reputation for overcharging was first raised in NSW Parliament in 2001 by MP Peter Breen, who referred to him as someone who had been investigated for at least eight years and ''anyone who asks Leon Nikolaidis to undertake legal work does so at his or her peril''.
The biggest show of loyalty was Wily's appointment of Nikolaidis as his solicitor for the BACF group of companies when Nikolaidis was on bail awaiting a retrial. Wily paid him $2.6 million for his work on BACF and related entities.
After four retrials, Nikolaidis was found guilty. In March this year he was struck off as a lawyer in the NSW Court of Appeal on the grounds he was not a fit and proper person.
Also related to above article:
http://www.smh.com.au/business/too-big-for-the-police-to-handle-20100910-15532.html
Click to expand...

And it may be highlighted from the same article, that Byrnes' Australian Litigation Funding company recently changed its name to Lazar Bummer (fair dinkum; at the bottom).
Ian Lazar is a former Ian Rogut with a "bankrupt" history under previous name.
Regards,
 

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