Wellington Capital PIF/Octaviar (MFS) PIF

[Mary Lynch]

So if public examinations for the CA are completed at the end of March, how long does it take to get into the courtroom? How long does litigation take? And do all the respondents have to be re-examined?
Surely the IMF's job isn't over until the end of proceedings....that would make the whole thing completely futile!

 

[ASICK]

Had a look at the Report and nothing has changed, if anything the figures are worse than
last quarter. She reckons it is the fault of borrowers obtaining refinance facilities and the inability to realise adequate asset values.

I think it is the inability of WC to manage our fund, by their lack of transparency. If it so bad why did WC pay us 1c distribution. Of course the figures would look a lot better without paying it.
Does she think we are stupid.
Please can she now resign forthwith.

Hi Lawry1dog, you're misquoted W.C.

It should be:
"... difficulties experienced by borrowers in obtaining refinance facilities ..."

 

[seamisty]

Hi Lawry1dog, you're misquoted W.C.

It should be:
"... difficulties experienced by borrowers in obtaining refinance facilities ..."

Yeh well ASICK, I guess the majority of PIF investors spent time deliberating and considerating after attending the Wellington Capital well paid for travelling circus spiel in 2008 when they were left with no other alternative, that by supporting a prospective RE with a well touted legal background and over exagerated botoxique banking status that they would be well represented legally and would be better off than if the fund had of bee liquidated. How wrong we were!! Seamisty

 

[ASICK]

Yeh well ASICK, I guess the majority of PIF investors spent time deliberating and considerating after attending the Wellington Capital well paid for travelling circus spiel in 2008 when they were left with no other alternative, that by supporting a prospective RE with a well touted legal background and over exagerated botoxique banking status that they would be well represented legally and would be better off than if the fund had of bee liquidated. How wrong we were!! Seamisty

How would you know if winding up is better or worse than keeping the fund alive?

How would you know if liquidators would gouge more or less than managers?

How do you know that you made the wrong decision? Winding it up could have ended up worse! How would you know?

Maybe you're damned if you do, and damned if you don't.

You probably decided the way you did because you tried to remain optimistic, a trait managers often rely on in order to get what THEY want.

You guys weren't the first (and won't be the last) to vote in fear of fire sales, but I guess you know that by now.

 

[marcom]

More on the likelyhood of ASIC's Chair staying on after his contract expires in May from the SMH Business Day Scott Rochfort March 9, 2011:

LEAVING DRINKS?

The wave of self-congratulatory tributes, meanwhile, have continued to flow for the nation's top corporate grime fighter Tony D'Aloisio.

The Australian Securities & Investments Commission has posted on its website a recent Q&A between its chairman and Company Director magazine, in a further hint Mr D could soon announce that he will not seek another five-year term.

Apparently a strategic review undertaken in late 2007 and early 2008 set ASIC ''up very well to be able to handle a lot of issues that came out of the GFC''.

''We were able to handle the issues that came out of the GFC quite well with the structures we put in place,'' said Mr D.

Mr D said his biggest achievements included increasing ''resources on improving confidence of the financial markets'', ''assisting and protecting retail consumers'', making ''timely and important judgments during the GFC'' and ''being more forward looking and trying to anticipate''.

The magazine interview came just after Mr D told the ASIC Summer School that the $66 billion of corporate collapses in the recent crisis was only ''a slightly greater proportion of GDP than the $20 billion lost in the major collapses during the turmoil of the late 1980s''.

Mr D also seems to have a very clinical approach to his key pastime outside ASIC. Speaking about the Oakridge Winery he owns with his wife Ilana in the Yarra Valley, Mr D said: ''It's a business, not a hobby, and a wonderful contrast to ASIC and keeps us in touch with the joys of owning a medium-sized business.'' The Oakridge winery was previously owned by the ill-fated winemaker Evans & Tate.

The magazine article noted how Mr D ''chose not to discuss'' whether he would renew his contract at ASIC which expires in May.

http://www.smh.com.au/business/sobering-advice-for-new-regulators-20110308-1bmfu.html

 

[selciper]

There’s a fellow PIF investor I encounter a few times a year at a bus stop. Elderly, he checks out this forum via his daughter’s laptop. Last week we had a chat. His mood has changed where the PIF is concerned. He cannot see any blue sky for the fund and is losing patience with the CA. He accepts that the process can take years to complete, but like others his age, wonders whether he will still be alive to see a resolution. His views may well reflect the feelings of many as we go through this threadbare period. Our short conversation was pretty depressing. Any chance that the next one will be happier?

 

[seamisty]

Interesting Figures:::ASIC prosecutes 19 Qld company officers

http://www.qbr.com.au/news/articleid/72622.aspx



March 9, 2011

The Australian Securities and Investments Commission (ASIC) is urging businesses to keep theirs books and records in order after 75 individuals were prosecuted late-last year for breaches of the Corporations Act 2001.

Among these were 19 company officers from Queensland who were put on trial between September and December 2010 for offences such as failing to assist external administrators.

ASIC says it took action following complaints from the public and insolvency practitioners.

The 75 prosecutions reportedly resulted in fines totalling over $90,000.

ASIC also referred three briefs to the Commonwealth Director of Public Prosecutions (CDPP) who successfully prosecuted directors for managing a company while disqualified.

Of the 75 directors prosecuted, 47 were from New South Wales, 19 were from Queensland, five were from Western Australia, three were from Victoria and one was from South Australia.

ASIC Commissioner Dr Peter Boxall says without a Report as to Affairs and a company’s books and records, liquidators can not properly investigate the underlying causes of a company’s failure.

“This may impact on a liquidator’s ability to establish the true financial position of a company and to realise assets to satisfy creditor demands and employee entitlements,” Boxall says.

‘Our work in this area demonstrates our focus on small to medium enterprise companies (SMEs) who are most vulnerable to changing economic climates, and therefore at greatest risk of failure,” he says.

When an SME fails, Boxall says it has a significant downstream impact on other SME creditors and employees.

“We are committed to holding those individuals who fail to assist external administrators of distressed companies accountable so that an orderly wind-up can be conducted,” he says.

 

[seamisty]

Peppers resort latest casualty of downturn
The Peppers Bale Resort in Port Douglas, where Desperate Housewives star Teri Hatcher is rumoured to have stayed, has closed its doors after being unable to pay its bills and may be placed in administration.

In the boom, developers The Ray Group and failed company MFS (now Octaviar) promised that the $130 million resort would become the pride of Port Douglas, with guests paying a minimum of $1000 a night and investors securing returns of as much as 7 per cent.

But the 50-odd owners who bought into the development have instead seen room rates fall to as little as $200, which meant once bills were paid they were effectively paying guests to stay at the property.

Resort operator Mantra has distanced itself from the closure, which has come after the Port Douglas market crashed in the wake of the global financial crisis.

Mantra was renamed after it was separated out of the Stella Hospitality Group, which was once part of MFS.


Mantra said yesterday that it owned the Bale trademark but had no interest in the owner of the resort's management rights, Port Douglas Resorts Pty Ltd.

Guests staying at the resort were being relocated and others who had bookings at the property would be relocated and offered other options, Mantra said.

However, a spokeswoman for the body corporate said yesterday some of the villas that were not managed by Mantra were still operating.

Port Douglas Resorts director Alan Porteous confirmed that the resort was no longer viable, but said a restructure plan was being worked on where it could be reopened in a different form.

The majority of the villas are managed by Mantra, which is owned by the private equity investor CVC Asia Pacific.

Mantra chief executive Bob East has defended the company's position in the past, saying it was brought in as manager only in 2009, had not promised the high rates of return and the owners had asked Mantra to manage the resort on their behalf.

http://www.theaustralian.com.au/new...alty-of-downturn/story-e6frg6nf-1226018670677

 

[selciper]

We can expect to see fuller reports soon on the result of this class action that took place in Melbourne and has just been settled. It was a long journey.

http://www.abc.net.au/news/stories/2011/03/10/3160187.htm.

 

[selciper]

SMH story on Amcor class action result.

ss/amcor-visy-settle-for-95-million-20110310-1bomq.html

 

[seamisty]

Hi Marcom, Would you please summorise this Qld judgement re Bentleys and Fortress? Thanks, Seamisty


Fletcher and Ors v Fortress Credit Corporation (Australia) II Pty Limited [2011] QSC 030 (10/3442) Brisb McMurdo J 8/03/2011

WILLIAM JOHN FLETCHER AND KATHERINE ELIZABETH BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 107 863 436 (Second Applicants)
and
OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 107 863 436 (Third Applicant)
v
FORTRESS CREDIT CORPORATION (AUSTRALIA) II PTY LIMITED
ACN 114 624 958 (Respondent)


http://archive.sclqld.org.au/qjudgment/2011/QSC11-030.pdf

 

[BootsnAll]

View attachment 41796View attachment 41797

 

[seamisty]

View attachment 41796View attachment 41797

Thanks for that BootsnAll, I was playing with some Wellington Capital figures and will confess I am not qualified in any way but will put the figures out there for comment, disection or whatever!!


WC has had control of the fund for over two and a half years. In a PIF investor update July 2008 Ms Hutson said:

'Our aim is to drive a value recovery strategy that sees the full

capital value returned to unitholders over the next 3 to 5 years.'

The fund had debt of $20 million at that time. '

Bank debt has been reduced from $70 million at 31 May 2008 to $20 million at 31 July

2008.
http://www.wellcap.com.au/assets/pif/updates/2008/Explanatory Memorandum.pdf


The estimated realisable value of the total assets as at 31 May 2008 was $413.7

million http://www.wellcap.com.au/assets/pif/updates/2008/Explanatory Memorandum.pdf

So deduct $70 milion from $413.7 = $343.7 million.
Our 1 cent return of capital = 7.755 million
Balance = $335.945million

Current PIF value of 770 million units @34cents as indicated in the Half Yearly Report to 31 December 2010 = $261.8 million.

What happened to the missing $74.145 million?

Not to mention any income stream from other PIF assets apart from any 'value adding, growth, etc?
Now the bit about the Wollongong Hotel Deal that fell through in 2009 for $38 million has really got my antennae twitching!!!

I have on my records directly from the Regional Director, Sales and Investments at JonesLangLasalle who was personally involved with the auction of Wollongong as saying::'The property was submitted for sale by Public Auction and as such the events of the auction are a matter of public record.

Several parties were bidding on the property with the last bid at $ 40.5 million.The Auctioneer at this stage asked for instructions from the Vendors and it was aprox 30 minutes later that he was instructed to pass the property in as $ 40.5 million was not acceptable to the Vendors.'

Wellington Capital could have accepted $40.5 million in may 2009 but declined. Has the reporter got this wrong or did WC stuff up again?

Seamisty

 

[lawry1dog]

It is unbelievable that WC has the gall to say the quote below:-

Hutson described the $3.6 million loss as a "solid outcome" for the fund, which has 10,700 unit holders.

It is a LOSS, so please can she RESIGN.

How can she be allowed to get away with this?

Maybe another complaint to ASIC is in order again, along with the other many I have
sent.

 

[selciper]

Lawrrydog, you are right to point out that sentence. Where is the logic in such a proposition?. It reads as if the objective of the fund is to make losses. It's an example of contemporary management-speak at its most absurd.

 

[ASICK]

It is unbelievable that WC has the gall to say the quote below:-

Hutson described the $3.6 million loss as a "solid outcome" for the fund, which has 10,700 unit holders.

It is a LOSS, so please can she RESIGN.

How can she be allowed to get away with this?

Maybe another complaint to ASIC is in order again, along with the other many I have
sent.

Yes, and like all damaged managed funds not paying distributions, the loss is compounded by a loss of income as well: inflation kills!

 

[seamisty]

Pressure mounts as fund declines http://www.couriermail.com.au/ipad/pressure-mounts-as-fund-declines/story-fn6ck2gb-1226020047216
Anthony Marx From: The Courier-Mail March 12, 2011 12:01AM
'SOLID' PERFORMANCE: Wellington Capital's Jenny Hutson speaks at the Gold Coast Convention Centre. Picture: Adam Head Source: The Courier-Mail

A BRISBANE merchant bank copping fierce criticism over its management of a long-struggling $253 million investment fund could face a challenge to its control this year.

Wellington Capital released a report this week showing that its Premium Income Fund had lost a further $3.63 million in the six months to December. That followed a $35 million net loss in the same period of the previous year.

The half-year report also reveals that the fund, once valued at more than $750 million, suffered a further drop in its net asset value from $265 million to $253 million. At the same time, expenses surged from $1 million to $11 million.

Wellington head Jenny Hutson yesterday described it as "a solid half" and attributed the net loss to the accounting treatment of a $38 million hotel and unit project in NSW.

But many of the nearly 11,000, mostly elderly, investors complain they have received only a 1c a unit dividend in the nearly three years since Wellington took over the fund from now-defunct Octaviar, formerly known as MFS.

Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
They say many of Ms Hutson's promises to turn around the fund have failed to eventuate.

"I'm extremely unhappy with the way it's going because we think it's actually going backwards," one investor said.

A hostile takeover bid for control of the fund mounted by Sydney-based ALF PIF Finance has been extended to June 14.

The challenge has so far attracted the support of investors with fewer than three million of the 755 million units on issue.

But Jim Byrnes, a consultant with ALF, yesterday said he hoped to call an extraordinary general meeting to remove Wellington if he could secure acceptances from those controlling 5 per cent of the units. That would amount to almost 38 million units.

ALF has also committed to backing a class action against Wellington and other parties on a no win/no fee basis if it seizes control of the fund.

"There are a whole lot of questions that need to be asked," Mr Byrnes said.

Wellington has denounced the takeover offer as "opportunistic" and "grossly inadequate". It has also highlighted the background of Mr Byrnes, a former bankrupt now banned from being a company director.

Ms Hutson declined to say if the fund, which has made no profit since 2007, could return to the black this year. She also would not commit to another dividend payment.

 

[selciper]

"Ms Hutson declined to say if the fund, which has made no profit since 2007, could return to the black this year. She also would not commit to another dividend payment." - Courier Mail. Thanks, Anthony Marx, for asking that penetrating question which elicits no answer from one who made so many pomises..

 

[Duped]

Yes, and like all damaged managed funds not paying distributions, the loss is compounded by a loss of income as well: inflation kills!

Spot on ASICK. Latest CPI is 174.0. CPI when PIF listed on the NSX was 166.5. So $1 back then is worth 95.7c now. That puts the 1c distribution in perspective doesn't it everybody!! Add to that the debts that many of us PIF investors could have paid down but instead have been costing us interest. If WC focused strategy more on the NSX unit price it would probably get a better overall outcome for unit holders.

But ASICK, what if NOW is the best time to sell PIF's assets. Hutson goes on about this 3-5 years horizon. Isn't that based on the HUGE assumption that we're in a normal cycle. But what if we aren't????? What if property prices won't recover for 10+ years. After all this is not a normal event. As Hutson keeps reminding us: this is the GFC. What if prices are actually being propped up by the resource boom? In which case property prices WON'T recover in Hutson's time frame. So when you add inflation, then the time to sell is now.

Is WC more interested in the bragging rights of the size of funds under management?

And you're right about 'damned if you do and damned if you don't'. Which is likely exactly why Hutson sold the trust story to us? And we fell for it. But Hutson has hardly distinguished herself from the pack. That's the pack that we need immediate liquidity on a Stock Exchange to protect ourselves from.

This makes ASIC head D'Aloisio's comment increasing ''resources on improving confidence of the financial markets'' so laughable. Does that make D'Aloisio a 'confidence man'? Or a con-man for short? So given PIF's destruction of our wealth and that we're 'damned if we do and damned if we don't'; remind me again why D'Aloisio is out there using tax payer's money to "improv[e retail investors'] confidence of the finanical markets"? Like using the Commonwealth brand to help AFS Licensees to neutralise retail investors caveat emptor? That's a rhetorical question.

While you're all thinking about that, here's another thought. The less capital you have: the more you need to work, the greater Australia's GDP and the greater the government tax take. On the other side of the equation, wealth destroying managed funds like PIF are fantastic for Australia. Our capital pays management fees which creates employment and commercial tenants for shiny new office buildings. The management company, staff and commercial property then pay tax. Our capital is also put to work to build e.g. the Noosa Sanctuary Resort (Cost $210M to build - bought by RACV at substantially less). This of course creates jobs, generates tax and creates attractions to bring in the tourists. But like Skase's Sheraton Mirage GC and the Cape Shank resort (built by Japanese investors - bought by RACV for substabtially less), these things always cost more to build than they can every possibly return to the investors. Enter 'the greater fool' theory.

It's all about the GDP. You can do that by actually creating something new or ..... read up about 'velocity of money' on wikipedia. Simple maths. After the corporate-federal Australia partnership's success in burning Japanese property investors, the partnership turned its sights on its own people. The joke's on us. We're the samrt money's piggy bank. We're the fools. I don't have a problem with free markets, I have a problem with ASIC's reckless 'confidence man' involvment, paid for by our taxes. But you appear to be OK with this.

 

[Duped]

Hi Marcom, Would you please summorise this Qld judgement re Bentleys and Fortress? Thanks, Seamisty


Fletcher and Ors v Fortress Credit Corporation (Australia) II Pty Limited [2011] QSC 030 (10/3442) Brisb McMurdo J 8/03/2011

WILLIAM JOHN FLETCHER AND KATHERINE ELIZABETH BARNET AS LIQUIDATORS OF OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 107 863 436 (Second Applicants)
and
OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 107 863 436 (Third Applicant)
v
FORTRESS CREDIT CORPORATION (AUSTRALIA) II PTY LIMITED
ACN 114 624 958 (Respondent)


http://archive.sclqld.org.au/qjudgment/2011/QSC11-030.pdf

Marcom. Para [46] worries me. Does this mean that Fortress can run up debts against NAB and then NAB can just swipe the $40m that McMurdo has frozen for us unsecured creditors like PIF? What's the likelihood of NAB cooperating with Fortress to enagage in such a scheme?