Wellington Capital PIF/Octaviar (MFS) PIF

[seamisty]

Here is our PIF Dec update. A boring cut and paste effort offering nothing new apart from No further cash payments have been
scheduled at this time.
http://www.nsxa.com.au/ftp/news/021723633.PDF

 

[marcom]

Two interesting points contained in the PIF Dec update in relation to the Qld Supreme Court ASIC action against the former MFS Directors and others:

"ASIC has appointed Corrs Chambers Westgarth to act on their behalf in these proceedings. Each of the Respondents is required to file a Defence by 24 March 2011".

Until 21 October ASIC was represented by in-house legal staff. The appointment of CCW indicates they are bringing in the big guns. While the respondents are required to file a defence by 24 March, the court has scheduled a supervised case review on 25 March.

http://www.courts.qld.gov.au/esearc...eNumber=12122/09&Court=Supreme&Location=BRISB

 

[JohnH]

:dunno:.......... Marcom, I also found this statement quite curious :-
The Fund takes its obligation to act in the best interests of its
Unitholders seriously and ensures that appropriate
representations are made to the Court in each case where a
borrower is attempting to hinder the Fund’s rights etc etc

Surely the RE does not have an option other than to act in our best interests - or am I being naive again?

 

[marcom]

:dunno:.......... Marcom, I also found this statement quite curious :-
The Fund takes its obligation to act in the best interests of its
Unitholders seriously and ensures that appropriate
representations are made to the Court in each case where a
borrower is attempting to hinder the Fund’s rights etc etc

Surely the RE does not have an option other than to act in our best interests - or am I being naive again?

The obligation to act in the best interests of Unitholders is enshrined in the Corporations Act as the central pillar of an RE's duty. So to say an RE takes this seriously is a nonsense as it is required by law and can not be applied in any other way! However in WC's case it is probably offered as a cover for bloated legal fees, and/or if the borrower has responded with a cross claim a rationale for further bloated legal fees and maybe potential loss to the Fund. I think Seamisty mentioned possible legal action against the fund by a disgruntled developer some time ago.

 

[selciper]

Re the Update: one matter you can safely rely on where Wellington is concerned is the way they continually underestimate the collective knowledge of PIF investors. One day they may come to regret this failing.

 

[seamisty]

The obligation to act in the best interests of Unitholders is enshrined in the Corporations Act as the central pillar of an RE's duty. So to say an RE takes this seriously is a nonsense as it is required by law and can not be applied in any other way! However in WC's case it is probably offered as a cover for bloated legal fees, and/or if the borrower has responded with a cross claim a rationale for further bloated legal fees and maybe potential loss to the Fund. I think Seamisty mentioned possible legal action against the fund by a disgruntled developer some time ago.

Marcom that 'possible legal action' is a reality and is well and truly underway and has cost the PIF hundreds of thousands of dollars in legal expenses already and is nowhere near being resolved!!! selciper you are correct in saying WC underestimate the collective knowledge of PIF investors, some contributed by other individuals willing to share valuable information also, much which cannot be posted in the public arena but gathered and documented for future reference. Seamisty

 

[marcom]

Scotty and Hottie back in the news!

Numbers finally start to add up as operators go back to basics
Colin Kruger
January 22, 2011 SMH

http://www.smh.com.au/business/numb...erators-go-back-to-basics-20110121-19zy6.html

Two years after ABC Learning's collapse the jury is still out on whether profit and child care can mix, reports Colin Kruger.

WHEN ABC Learning began its meteoric rise nearly a decade ago the question raised by many community childcare operators struggling to break even was simple: how could this corporate leviathan make any money, let alone the fantastic figures it was reporting?

For hapless ABC Learning insiders, the question was: how could it not?

''This is a business subsidised by government - how can it be unprofitable?'' wailed ABC Learning's former chairwoman, Sallyanne Atkinson, soon after the collapse...

In fact, there is already a new corporate player emulating ABC Learning's early years with a voracious appetite for other childcare operations and international expansion. This was not part of the script when community non-profit operators lined up at the Senate inquiry...

THE ASX-listed G8 Education - the result of a merger last year between the publicly listed straggler Early Learning Services (ELS) and the privately owned Payce - has embarked on an acquisition spree reminiscent of ABC Learning in its formative years. In November G8 said it owned 119 centres in Australia and managed another 21. In Singapore it owns 18 and manages a further 48.

The company has forecast revenues of $115 million for the current year and earnings before interest and tax of $17 million, but the pace of growth means it is hard to track how much growth is being internally generated and how much is being acquired.

This was also a problem at ABC Learning.

But G8's chief executive, Craig Chapman, says the company has avoided ABC Learning's excesses such as overpaying for the centres it acquires and using its shares - not debt - to pay for them.

''We've bought on the right multiples,'' Chapman says. ''We had evidence ABC was paying up to 78 times EBIT [earnings before interest and tax].''

Chapman is not shy about naming some of the important factors which allow profit-driven centres to thrive. He says having well-maintained centres and a strong education curriculum are crucial.

''With these factors you can charge a higher price,'' he says.

And with occupancy such a crucial factor, advertising is also important to make sure the centres are kept full.

Another important difference is that profit-oriented operators like G8 choose their markets carefully.

''Location is critical and the demographics around that location are definitely important,'' he says.

The company has not been shy about offering detailed numbers on how its profit engine works.

A recent market update reports G8's occupancy levels average about 80 per cent in Australia and 90 per cent in Singapore.

Breaking down the numbers, G8 says that Australia's 80 per cent occupancy levels gives it an EBIT margin of 18 per cent. Revenues per centre average $1 million.

Employee costs account for 60 per cent of the centres' revenues, with rent using another 12 per cent.

By comparison, KU's annual report for the year ending December 31, 2009, showed more than 83 per cent of revenues were paid out in staff costs.

While G8's ascendancy has not attracted any controversy to date the same cannot be said for all of its principals.

Its chairwoman, Jenny Hutson, and the managing director, Chris Scott, have a close relationship going back to the days of the travel group S8, which was acquired by MFS - the Gold Coast financier which subsequently imploded amid allegations of fraud.

In early 2008, Hutson had successfully lobbied for Scott and his associates to become directors of MFS and was later formally appointed as an adviser to the board.

One of those associates was G8's chief executive, Chapman.

The dealings of previous management meant the collapse of MFS was all but inevitable by the time the trio came on board, but controversial deals were still being done.

This includes Hutson's Wellington Capital being appointed the lucrative role of managing MFS's troubled Premium Income Fund - a position it holds to this day despite questions over whether the transaction was handled at arm's length given Hutson's closeness to the board.

In September last year, the insolvency specialist Mark Korda told a public examination of the collapse of MFS that the decision to appoint Wellington Capital as manager was the ''lesser of all the evils we could have done''.

''At the time of the transaction I don't think they were independent,'' Korda said at the examination.

Neither Hutson - who has publicly denied any conflict - nor Chapman and Scott have been accused of any wrongdoing in relation to the collapse.

Wall, who was previously involved with G8's earlier incarnation, ELS, sees nothing controversial in the trio's latest venture which, he says, is attempting to be an alternative to the ABC Learning model....


Strange that there is no mention of Chris Scott's conviction for secret commissions!!! Does anyone have an email address for Colin Kruger at Fairfax newspapers so I can send him a link to the Courier Mail article "High-flyer fined $130k for holiday rip-offs" at http://www.couriermail.com.au/prope...holiday-rip-offs/story-e6frequ6-1225971130633

 

[selciper]

Marcom, please check your private forum box for a message.

 

[marcom]

Marcom, please check your private forum box for a message.

Thanks

 

[Duped]

Here is our PIF Dec update. A boring cut and paste effort offering nothing new apart from No further cash payments have been
scheduled at this time.
http://www.nsxa.com.au/ftp/news/021723633.PDF

" No further cash payments have been scheduled at this time."
Talk about throwing a bucket of cold water on the share price.

WC writes about rebalancing the asset class allocations. What does that mean? The NEWPIF.COM.AU website is no use. Being way out of date: 30 June 2008. (I can't see how presenting such out of date info can put anything but downward pressure on our share price IMLO) At least the NEWPIF.COM.AU lists the target and benchmark asset ranges. I've extracted the 30 June 2010 numbers from the annual report.

Class : Range : Benchmark : 30-Jun-10
Commercial loans : 20-75% : 45% : 70.1%
Fixed interest securities : 0-30% : 10% : 1.7%
Property Backed Managed Investment Schemes : 10-40% : 25% : 21.4%
Asset backed investment : 5-40% : 15% : 5.4%
Cash and equivalents : 5-30% : 15% : 1.4%

The 2010 annual report goes on to state: "These asset allocations are outside the target allocation guidelines contained in the Product Disclosure Statement which was issued on 2 July 2007"

Firstly: why is WC labelling the asset classes differently than in the PDS? Are they the same thing? If so then why use different words?

Secondly: stating that the allocations "are outside the target" isn't a very clear. Only 1 out of the 5 classes was outside its range.

So what does "rebalancing" mean?

Next questions I have: are these ranges and benchmarks appropriate for the post GFC economic conditions?

So what's WC's business plan for this Fund? Same as for the pre GFC investment environment?

Anyone?

 

[seamisty]

Hi Duped, You ask

'So what's WC's business plan for this Fund? Same as for the pre GFC investment environment?'

If Wellington Capital actually have any sort of a business plan/strategy in place for the PIF it is quite obvious it has been put together by individuals who are totally lacking expertise, proved by current management on many occasions. Whatever 'the plan' is, it's not working!! The NSX PIF unit price of 0.66 cents for all of the last 19 trades further reflect the growing sentiment that unitholders continue to have no confidence in the team at Wellington Capital.

Seamisty

 

[Jadel]

Hi Duped

The PIF guidelines remain totally compromised from the 2007 model
by the rapid sale of good quality liquid assets to pay out the RBOS loan .

The integrity and composition of the fund has essentially been decimated. All we are now left with is a shell of assets that are devalued past the point of any rational guideline parameters to reduce risk .

The, so called,rebalancing of the portfolio is simply word play, cut and paste drivel , As Seamisty has pointed out

Any competent Re, with the best interest of investors as its primary concern, would have vigourously contested the repayment of the RBOS loan .WC has all the documentation on hand to prove the thansaction was fraudulent ,and therefore voidable

 

[Blueboy1]

Hi Duped, You ask

'So what's WC's business plan for this Fund? Same as for the pre GFC investment environment?'

If Wellington Capital actually have any sort of a business plan/strategy in place for the PIF it is quite obvious it has been put together by individuals who are totally lacking expertise, proved by current management on many occasions. Whatever 'the plan' is, it's not working!! The NSX PIF unit price of 0.66 cents for all of the last 19 trades further reflect the growing sentiment that unitholders continue to have no confidence in the team at Wellington Capital.

Seamisty

Seamisty, please check your private messages,Blueboy1

 

[Mary Lynch]

Hi to anyone who may answer this question. We have some frozen units with Wright Patton and Shakespeare. They are in the process of paying us out, minus the 12% that they invested with City Pacific. However they have made profits in other areas of our investment; we don't seem to benefit from that though. My question is "why?"

 

[marcom]

Hi Duped

Any competent Re, with the best interest of investors as its primary concern, would have vigourously contested the repayment of the RBOS loan .WC has all the documentation on hand to prove the thansaction was fraudulent ,and therefore voidable

This point should not be missed in our class action. When Wellinton Investment Management took over as RE they agreed to repay the RBS fraudulent loan when they had sufficient evidence of wrong doing. It seems clear now that the plan was to remove debt from Octaviar by transfering the RBS loan with PIF and get us mugs to pay for it!

WIM's action caused a significant loss to the fund and they should be sued as part of the CA, as should RBS for advancing loan funds without proper approvals or supporting documentation. This aspect is covered in the ASIC amended statement of claim with supporting evidence.

 

[selciper]

I certainly hope that a media outlet or two is taking an interest in our plght. We have been overlooked and deserve better. So long as Wellington can maintain the status quo (remain in the bunker) the longer we will suffer. Let’s not allow 2011 to resemble 2010!

 

[selciper]

Here's an item from today's Australian describing the latest regarding ABC Learning.

http://www.theaustralian.com.au/new...earning-collapse/story-e6frg6nf-1225995778312

 

[marcom]

Things are really starting to hot up on ASIC's Supreme Court case against MFS directors and others as evidenced by this piece in the lively Lawyers Weekly newsletter:

http://www.lawyersweekly.com.au/blogs/top_stories/archive/2011/01/26/hdy-to-open-in-brisbane.aspx

HDY to open in Brisbane

Posted Jan 26 2011, 08:53 PM by Lawyers Weekly

Henry Davis York has announced it will soon open a Brisbane office in a bid to consolidate its growing profile in the region.

The firm is currently acting as the key advisor on some of Australia's largest insolvencies on the ground in Brisbane, including ABC Learning Centres and Octaviar.

A spokesperson from the firm confirmed with Lawyers Weekly today that the firm has secured space in Brisbane and is expecting to officially open the new office in February.

Two partners, John Evans and Leonard McCarthy, will relocate from Sydney to establish the office. Both are currently advising the receivers of ABC Learning Centres and both have significant experience in restructuring and insolvency law.

"We are establishing our office in Brisbane in response to the needs and requests from our clients to provide on-the-ground advice in insolvency, banking disputes and restructuring work," said HDY managing partner Sharon Cook.

"The focus of our Brisbane office will be on these core service areas for which we have a strong market reputation."

Here are the relevant details from the court website re the case:

http://www.courts.qld.gov.au/esearc...eNumber=12122/09&Court=Supreme&Location=BRISB

30 18/03/2010 Notice of Change of Solicitors OCTAVIAR Respondent

OCTAVIAR ADMINISTRATION PTY LIMITED 101069390 Respondent HENRY DAVIS YORK LAWYERS

OCTAVIAR CASTLE PTY LTD 124889381 Respondent HENRY DAVIS YORK LAWYERS

 

[marcom]

Here is another interesting piece from the dusty archives of the Lawyers Weekly regarding the sale of S8 to MFS. Isn't it good to see the same small group interacting in a profitable way.

http://www.lawyersweekly.com.au/blo...7/mcculloughs-takes-a-bite-of-gobblefest.aspx

McCulloughs takes a bite of gobblefest

Posted Jan 17 2007, 12:00 AM by Lawyers Weekly

MCCULLOUGH ROBERTSON advised property management firm and tourism operator S8 Limited on its takeover by investment and financial services group MFS Limited.

The two firms announced plans for a merger via off-market takeover in September last year, and by 11 December last year MFS had achieved the necessary 90 per cent acceptance by S8 shareholders to compulsorily acquire the company.

“Despite the bid having the recommendation of the directors of S8, it was only in the last day of the bid that MFS shored up the necessary numbers to give it 90 per cent,” said McCulloughs’ partner Tony Stumm.

“Part of this is to be attributed to the fact that the acquisition strategy involved separate share offers, options offers as well as a separate offer for the convertible notes of S8 on issue and the majority noteholder held out for an increase in the offer consideration.”

Freehills partner Neil Pathak, and lawyers Robert Feiner and Robert Nicolson advised MFS.

Stumm said S8 itself had been “aggressively” making takeovers before the MFS bid, and had steadily increased its size with the addition of Harvey World Travel, Travel Scene, Transonic Travel and Gulliver’s Travel Group in New Zealand.

Soon after being bought by MFS, S8 (UK) completed another acquisition of UK travel specialist Travel 2 Travel 4.

Stumm said the merged firm was now an ASX150 company, and one of the big players in the Australian tourism industry, “notwithstanding its core business of funds management”. He said at the time of the merger, S8 had a capitalisation of approximately $700 million. The merged group has a capitalisation of around $1.7 billion.

MFS managing director Phil Adams said the acquisition would allow the “implementation of a wide-reaching plan to consolidate a range of leisure and accommodation businesses within one investment vehicle”.

Other advisers on the deal included Jenny Hutson from Wellington Capital Limited for S8 and Grant Samuel from Macquarie Bank for MFS.

Amazing how our Jenny managed to ocupy the role of Chairperson at S8 (and presumably a shareholder as well) and greatly assist the takeover by providing professional advice - presumably in an independent manner.

 

[marcom]

And to follow on from the last post I found this piece of history regarding the S8 takeover by MFS:

S8 gets a turbo charger
• Melissa Maugeri
• From: The Courier-Mail
• October 21, 2006 12:00AM

http://www.couriermail.com.au/business/s8-gets-a-turbo-charger/story-e6freqmx-1111112392092

CONFIDENT ... S8's chief Jenny Hutson. Picture: Adam Smith Source: The Courier-Mail

A MOVE into the ASX200 by acquisitive MFS has boosted its share price as shareholder offers for the friendly takeover of travel company S8 are finalised.
S8, which has been on a buying spree itself during the past 12 months, expects to double its after tax profit this financial year on the back of acquisitions including Harvey World Travel and Travelscene.

The travel company recorded an underlying net profit of $20.9 million last financial year but expects to strike $44 million this financial year and more than $60 million in 2007-08.

S8 also has earnings before interest, tax, depreciation and amortisation of $85.98 million in 2006-07 and $123.03 million in 2007-08.

S8 chair Jenny Hutson, who will join the board of MFS if the proposed merger proceeds, was bullish about the deal.

"Chris Scott and Michael King have put a lot of energy into briefing the market about the upside of the deal and now the share prices have rallied," Ms Hutson said.
She said the ACCC had brought forward its deadline for reporting back on the proposed takeover to November 7.

"We remain very confident about the outcome," she said.

Ms Hutson described S8's past year's performance as an exceptional one, with the travel company delivering a net profit after tax of $20.9 million and basic earnings per share increase from 24.71 ¢ in 2005 to 27.36 ¢ in 2006.

Shareholders re-elected Andrew Kemp, Robert Steel and Peter Lacaze as directors.

Ms Hutson said a successful completion of the MFS deal would see investors who have put in $1 get a return of more than $10 in five years.
"The issue price was $1 but we split the shares – it's a 10-bagger which doesn't happen much.

"If shareholders want to stay for the ride they can, and if they want to cash in their chips they've been on an extraordinary adventure," she said.

(Yes and those who stayed for the ride were in for an even bigger adventure!)

Under the deal, shareholders will be paid $4.25 a share, with the option to swap their shares for MFS stock. Ms Hutson said documentation for the takeover would be sent to shareholders within a week. S8 shares closed up 9 ¢ at $4.67.