Equititrust?

[ASICK]

CAPITAL WARRANTY or LICENCE TO SKIM?

http://www.equititrust.com.au/Pdfs/EIF_Pds_200902.pdf

(page 5), "... Is there a capital warranty?
As proof of its commitment to investor security, Equititrust must maintain a minimum investment in the Fund of $20 million as a Capital Warranty Investment to act as a buffer and absorb losses on loans should they occur.

Equititrust may maintain a higher level of investment in the Fund; as at 31 December 2008 that investment totalled $40 million. Equititrust’s investment is subordinated to the interests of investors and its entire investment would have to be lost prior to any investor loss. For further information see Section 7.5. ..."

(page 18), "... 7.5 Capital Warranty Investment
Equititrust holds a Capital Warranty Investment in the Fund.
The Capital Warranty Investment is the amount invested by Equititrust as a subordinated investment. This is a minimum sum of $20 million with no maximum. As at 31 October 2008, $40 million was held as a Capital Warranty Investment.
Capital Warranty – in the event the Fund suffers a capital loss, that loss is first incurred against the Capital Warranty Investment held by Equititrust in the Fund. The Capital Warranty Investment is a separate class of units on issue in the Fund and these units rank behind other investors in the payment of distributions.

The Capital Warranty Investment remains for so long as Equititrust remains the responsible entity of the Fund. In the event Equititrust ceases to be the responsible entity, then (subject to any Fund financier requirements) the Capital Warranty Investment automatically converts to an Access investment ranking equally with other investors. Despite the Capital Warranty Investment provided by Equititrust, there can be no guarantee of a return of capital or payment of income to investors. ..."

(page 14), "... When the income of the Fund is higher than the amount necessary to pay all investors Benchmark Rates, Equititrust will, after payment of the Benchmark Rates, receive its managed fee and any remaining surplus will be paid to Equititrust as the holder of the subordinated Capital Warranty Investment. ..."

"... The price of units in the Fund has historically remained at $1.00 per Unit. Equititrust has invested in the Fund a minimum $40 million to 31 October 2009 and thereafter at least $20 million as a Capital Warranty Investment. The Capital Warranty Investment acts as a buffer in the event the Fund suffers a loss arising from the operation of the Fund. ..."

Sorry to post again, but after looking at the purpose of the so-called 'Capital Warranty' as a subordinated investment, I fail to see just how the so-called 'Capital Warranty' warrantees anything if the manager is able pull out up to 39.04% of that warranty each year as a 'return' on a 'subordinated' investment (page 15, http://www.equititrust.com.au/Pdfs/FinReport062010.pdf)

(Financials, page 28), "... 10. Financial instruments (cont)
c. Financial risk management (cont)
(iv) Capital protection
The Responsible Entity’s Board policy is to maintain a minimum investment of 40,000,000 units in the Scheme. The rights attached to this investment are subordinated to those of other investors. This affords protection to investors and finances that any first loss up to $40,000,000 will be absorbed by the Responsible Entity’s investment. The Responsible Entity has the discretion to reduce the minimum
investment to $20,000,000. ..."

I'm always amazed how managers are able to set up SCHEMES to ensure the best outcome for themselves. The so-called 'capital warranty' seems to do no more than skim the extra profits out of the fund in any year, rather than have them off-set against potential losses in future years.

At the rate the manager of the fund is going, it'll have most of it's money back in three years. Of course, don't forget, than even if a 'return' is not available to the manager from the subordinate holding, the manager still racks up a management fee on those units. In any event it'll already have back more than $40m including leaving the $20m which would remain at risk (that is, withdrawing $20m at a later date, and leaving $20m as the warranty) when considering the over $20m in returns from the subordinate investment.

Interestingly, if for any reason the manager is replaced, then the warranty reverts to an ordinary unitholding (PDS, page 18).

If the fund does strike real trouble, then I reckon you'll get a real feel for your situation if the $40m so-called 'capital warranty' is suddenly reduced to the minimum $20m in the event no profits are on the horizon. Of course, investors won't get to know about it (if it happens) until the financials are released (which could be months later).

It also seems that the $20m is able to paid back to the manager regardless of the state of the fund which leaves only $20m at risk by the manager.

So, all the time the manager was able to rip out up to 36% of $40m and if things get tough, it'll able to redeem $20m even in bad times (non-liquid fund).

These are great SCHEMES if you can get one up and going.

 

[kostag]

Re: Equititrust: CAPITAL WARRANTY

ASIK

I htink that it is a bit worse than this - I don't think that anyone ever actually out $40M in. I thtink that this is part of the accumulated profits over the years which have been 'capitalised' into UNITS etc. Not quite the same thing. Normal accounting practice is that LOSSES would be first absorbed by ACCUMULATED PROFITS before impacting on THIRD PARTIES. But to still get 39% on it in the meanwhile, appears a bit rich.

 

[ASICK]

Re: Equititrust: CAPITAL WARRANTY

ASIK

I htink that it is a bit worse than this - I don't think that anyone ever actually out $40M in. I thtink that this is part of the accumulated profits over the years which have been 'capitalised' into UNITS etc. Not quite the same thing. Normal accounting practice is that LOSSES would be first absorbed by ACCUMULATED PROFITS before impacting on THIRD PARTIES. But to still get 39% on it in the meanwhile, appears a bit rich.

Yes, I see that, "... Combining absolute commitment to investor protection with keenly honed property finance skills, Equititrust has grown substantially. To ensure it is adequately resourced, Equititrust Limited has maintained a long-term strategy of growing retained earnings (as at 31 December 2008 this figure was $62,053,068) A substantial portion of the earnings are invested in the Fund ($40 million as at 31 December 2008). This investment: • is subordinated to the interests of investors as a safety buffer against loss; and • in this PDS is referred to as the Capital Warranty Investment.

but nevertheless, it's the structure the manager put up (and declared in the PDS) to give some comfort to investors, but in just two short years they're recovered over $20m in 'returns' from that 'investment'. Consequently, if the manager reduced the capital warranty to $20m, then it's already taken well over $20m from the fund in just years anyway (then the manager would have recovered more than the $40m warranty (over $20m in 'returns' + $20m redeemed + $20m remaining security).

Yes, the fund was consolidated into the accounts of Equititrust Limited and the amount, as you say, was retained earnings held as capital warranty units. After the issuance of the PDS, the fund was deconsolidated so the Equititrust Limited would no longer be permitted to skim profits off the fund or be liable for the fund's debts (whichever was applicable).

As permitted in the PDS, Equititrust Limited skimmed the profit in the fund but limited it's capital warranty to a minimum of $20m (or $0 if ousted as manager) - a much better deal than having the fund consolidated into the company's accounts.

The PDS added another level of security for all capital warranty amounts over $20m by allowing redemption such units even in a non-liquid fund:-

PDS, page 25, Paragraph 12.11, "... (f) subject to paragraph (d) above, the redemption of the Capital Warranty Investment can only occur:
(i) with the consent of Equititrust; and
(ii) all valid withdrawal request forms have been processed and paid at a withdrawal price of not less than $1.00 per unit; and
(iii) provided the redemption does not breach any existing facility agreement;
(iv) there being retained sufficient surplus in the Fund to meet any income warranty for the current month; and
(v) Equititrust has a reasonable belief that any income warranty will continue to be met. ..."

So, in particular circumstances, $20m of the $40m warranty would be able to redeemed. To my mind, that turns at least $20m of the 'capital warranty' to a debt. That would make the debt equal to the sum of the NAB loan AND $20m of the capital warranty.

It's a great deal to rip 36% of $40m in a year, but if that drops to very little or even zilch, then I'd be surprised if $20m of the capital warranty isn't redeemed (whether the fund is liquid or non-liquid) at the soonest possible moment. Of course, investors won't know about it until informed in the fund's financials.

It'd be my guess that the redemption of up to $20m of capital warranty units would be the 'canary' in your fund as was the deconsoldiation of the City Pacific First Mortgage Fund from the accounts of City Pacific Limited.

Of course, if the manager is replaced (for any reason whatsoever), the capital warranty converts to access units.

To my mind, this 'capital warranty' gives at best $20m of security, while the other $20m seems to sit more snugly with the concept of debt (because it's able to be redeemed at full $1.00 value even while the fund is non-liquid)

Mind you, I'm no expert at this - just self-taught in another messy fund.

 

[kostag]

hell, ASICK. I think that I understand what you are saying here. It is good to see that we have knowledge in these matters assisting in the analysis.

ASICK, in your expereince how is this all heading?

Perhaps the EQUITITRUST strategy is not akin to City Pacific, Asset Loans, MFS etc and others.

Maybe the fact that they are there now is a testimony to good management rather than skullduggery.

How do you know?

 

[ASICK]

hell, ASICK. I think that I understand what you are saying here. It is good to see that we have knowledge in these matters assisting in the analysis.

ASICK, in your expereince how is this all heading?

Perhaps the EQUITITRUST strategy is not akin to City Pacific, Asset Loans, MFS etc and others.

Maybe the fact that they are there now is a testimony to good management rather than skullduggery.

How do you know?

Well, it's a bit like the old adage, "This won't hurt - did it?"
One minute you're a happy little vegemite, and the next minute you can't get your money back - and the manager's the only who knows when your fortune is about to change.
.. then after paying tax on interest for years, you might find out you've made a capital loss after paying tax on money that probably was nothing more than your own capital being fed back to you to keep you happy.
And then you suddenly become interested in the terms of your PDS, your fund's constitution, and the Corporations Act.
You join a forum and look for the latest news.
Ah! gone are the days of just sitting back and watching your bank balance grow.
[let's hope all the foregoing doesn't apply to you - It sure as hell appliles to me].

 

[kostag]

Re: Equititrust: TAX LOSS OR CAPITAL LOSS

so ASICK: what you are saying is that I pay TAX on the 8% interest that I get - so I finish up with about 5.5% - however , if I loss say $200,000 on a $1Million, that $200,000 is not a tax deddductible loss? How crazy is that!

BY the way, did you see in teh financial press, the COLONIAL FUND owned by CBA with over $800M in it, CBA took $17M in fees, and again INVESTORS don't get their money back there eiether!

Its a disgrace.

Just one thing though they piad $17m in fees on $800M, we are paying $15m fees on $200million!

Either way - it is wrong by both entities.

None of us should be paying any fees for such lowly performance!

 

[awg]

This thread exemplifies why I dumped all managed funds, especially property and mortgage funds, sacked my financial advisor, established an SMSF, and invested in LISTED entities.

If you are going to get ripped-off by directors, bankers, etc there are plenty of opportunies on the ASX, or other exchanges, but at least I can part company with them in 30 seconds.

No direct knowledge of Equititrust, but the postings here indicate that high fees are being charged, and investors cannot redeem

 

[No Trust]

Equititrust Deception Caught Out

It seems a lot of investors missed the point as AWG sets out and thought their money was liquid. There needs to be a timeframe as to how long a fund can remain frozen. The fee gouging when the fund is frozen is also unbelievable.


Then to top it off you have Equititrust acting in the most unethical and unprofessional manner, operating multiple accounts on this Web Site and pretending to be investors. It does not get any worse than this.


The administrator of this web site thankfully stepped in and made everyone aware of what was happening..

 

[ASICK]

Re: Equititrust: TAX LOSS OR CAPITAL LOSS

so ASICK: what you are saying is that I pay TAX on the 8% interest that I get - so I finish up with about 5.5% - however , if I loss say $200,000 on a $1Million, that $200,000 is not a tax deddductible loss? How crazy is that! BY the way, did you see in teh financial press, the COLONIAL FUND owned by CBA with over $800M in it, CBA took $17M in fees, and again INVESTORS don't get their money back there eiether!

Its a disgrace. Just one thing though they piad $17m in fees on $800M, we are paying $15m fees on $200million! Either way - it is wrong by both entities.

None of us should be paying any fees for such lowly performance!

A ponzi scheme may be described as a scheme in which members are paid back capital as interest. Alternatively, it might be described as a scheme in which new investment is paid out as interest to members.

These schemes need a continuous inflow of investment capital as the 'oxygen' that keeps them 'alive'. Management of cash flow and accurate valuation of assets are critical elements of funds management so. In the strictest sense, managed funds/banks/building socieites are non-liquid all the time and, as they cannot repay all investors on demand, they may be defined as ponzi schemes because they rely on new investment money and general cash flow to satisfy redemptions and/or withdrawals.

In the event the scheme formally freezes (lack of new investment/mass demand for redemption) then the scheme relies heavily on the value of assets: there is no ballast provided by the ebb and flow of capital to keep the fund afloat. I think it is that ballast which obfuscates the true financial position of a fund. If there is a high level of investment and a low level of redemption, then the value of assets need not be tested (by sale). So, it's possible to pay income (based on particular asset value) in circumstances where assets have been overvalued for one reason or another. Alternatively, if those assets were properly valued, no profit might be recorded, and therefore no payment of income possible.

However, when a fund freezes, there is no more new investment and the ONLY source of liquidity is from asset sales: it is at this time where investors see the REAL value of assets as those assets are sold in order to satisfy fund expenses and hopefully, investor redemption payments.

So, let's say a fund runs fine for 5 years, and during that time it returns 10% per annum. Let's say that fund then freezes and members suffer a 20% loss of capital. What's the tax position? Well Joe Investor duly paid tax for the five years, but will be unable to offset the capital loss against his previous or future income. He's have to find a capital gain in order to recover the loss. This is one issue that doesn't seem to be addressed by members of all the damaged funds - and it's one that ASIC and the ATO seem not to want to get involved with.

The issue is being or has been raised in the US. Madoff investors' payment of tax on income which turned out to be no more than an eked out return of their very own investment capital. I don't know what the outcome is/was, but investors paid tax believing they were earning income, but in reality they were not, so surely they would be entitled to a tax refund?

Don't you think you'd be entitled to a tax refund if you paid tax on income earnt in this fund this year if you found out next year the fund had suffered substantial capital losses which went back in time to, say, last year?

Now your fund's mettle is being tested, and it wont be until loans are finally wound up that you'll find out the true value of the fund's assets and if necessary, the quality of other securities backing loans made by the fund: a process that might take years and years.

So, you're earning money now, and may be paying tax .. but you don't know the eventual outcome for your capital. Even the High Court of Australia is perplexed by the distinction been income and capital, but the beat goes on .. and the distinction persists.

My guess is that most members of damaged funds have been ripped off by paying tax in circumstances where assets were overvalued for one reason or another. Sadly, that tax becomes just another loss many investors have to suffer in silence.

Yes, I was sent the link about the Colonial fund. If these managers were paid only on performance, many of them wouldn't be paid. As to the fees, you have to look to the PDS. Yes, it's not right, but it what we signed up on. I certainly won't make the same mistake twice.

As for your fund, investors won't find out how they'll fare until loans are wound up and the sale value of assets and if necessary, securities are pursued. I wouldn't be surprised if your fund starts to incur impairments now that it's non-liquid, but I hope I'm wrong. I think investors should see any further redemption of the capital warranty investment as a foreboding: after all, what would cause a manager to take money out if it had the potential to earn nearly 40%? [Answer, only when it stood to earn nothing].

I don't expect everyone (or anyone) to agree with me - just my self-taught opinions.



..

 

[kostag]

Re: Equititrust: TAX LOSS OR CAPITAL LOSS

Thankyou ASICK, you have certainly taught me some things and you are right, the tax treatment is patently wrong. It is also fair to say, that Equititrust are not alone and have done a good job on the one hand to have been able to survive for so long. Lets see how it all plays out. I wont be lodging my 2010 tax return just yet, that's for sure.

A ponzi scheme may be described as a scheme in which members are paid back capital as interest. Alternatively, it might be described as a scheme in which new investment is paid out as interest to members.

These schemes need a continuous inflow of investment capital as the 'oxygen' that keeps them 'alive'. Management of cash flow and accurate valuation of assets are critical elements of funds management so. In the strictest sense, managed funds/banks/building socieites are non-liquid all the time and, as they cannot repay all investors on demand, they may be defined as ponzi schemes because they rely on new investment money and general cash flow to satisfy redemptions and/or withdrawals.

In the event the scheme formally freezes (lack of new investment/mass demand for redemption) then the scheme relies heavily on the value of assets: there is no ballast provided by the ebb and flow of capital to keep the fund afloat. I think it is that ballast which obfuscates the true financial position of a fund. If there is a high level of investment and a low level of redemption, then the value of assets need not be tested (by sale). So, it's possible to pay income (based on particular asset value) in circumstances where assets have been overvalued for one reason or another. Alternatively, if those assets were properly valued, no profit might be recorded, and therefore no payment of income possible.

However, when a fund freezes, there is no more new investment and the ONLY source of liquidity is from asset sales: it is at this time where investors see the REAL value of assets as those assets are sold in order to satisfy fund expenses and hopefully, investor redemption payments.

So, let's say a fund runs fine for 5 years, and during that time it returns 10% per annum. Let's say that fund then freezes and members suffer a 20% loss of capital. What's the tax position? Well Joe Investor duly paid tax for the five years, but will be unable to offset the capital loss against his previous or future income. He's have to find a capital gain in order to recover the loss. This is one issue that doesn't seem to be addressed by members of all the damaged funds - and it's one that ASIC and the ATO seem not to want to get involved with.

The issue is being or has been raised in the US. Madoff investors' payment of tax on income which turned out to be no more than an eked out return of their very own investment capital. I don't know what the outcome is/was, but investors paid tax believing they were earning income, but in reality they were not, so surely they would be entitled to a tax refund?

Don't you think you'd be entitled to a tax refund if you paid tax on income earnt in this fund this year if you found out next year the fund had suffered substantial capital losses which went back in time to, say, last year?

Now your fund's mettle is being tested, and it wont be until loans are finally wound up that you'll find out the true value of the fund's assets and if necessary, the quality of other securities backing loans made by the fund: a process that might take years and years.

So, you're earning money now, and may be paying tax .. but you don't know the eventual outcome for your capital. Even the High Court of Australia is perplexed by the distinction been income and capital, but the beat goes on .. and the distinction persists.

My guess is that most members of damaged funds have been ripped off by paying tax in circumstances where assets were overvalued for one reason or another. Sadly, that tax becomes just another loss many investors have to suffer in silence.

Yes, I was sent the link about the Colonial fund. If these managers were paid only on performance, many of them wouldn't be paid. As to the fees, you have to look to the PDS. Yes, it's not right, but it what we signed up on. I certainly won't make the same mistake twice.

As for your fund, investors won't find out how they'll fare until loans are wound up and the sale value of assets and if necessary, securities are pursued. I wouldn't be surprised if your fund starts to incur impairments now that it's non-liquid, but I hope I'm wrong. I think investors should see any further redemption of the capital warranty investment as a foreboding: after all, what would cause a manager to take money out if it had the potential to earn nearly 40%? [Answer, only when it stood to earn nothing].

I don't expect everyone (or anyone) to agree with me - just my self-taught opinions.



..

 

[kostag]

Re: Equititrust: CYBER BULLYING - ANOTHER DIVERSION FROM THE ISSUES

1. This apppeared on the EQUITITRUST web site yesterday - a warning about cyberbullying and CEO David Kennedy - see www.equititrust.com.au

2. How would a 'cyber saboteur' get the email addresses of EQUITITRUST investors?

3. Has any INVESTOR received anythng? I haven't.

4. as per a previous POSTING on this website - the emails come from EQUITILOST@GMAIL and are signed off as David Kennedy. If true, it is a cheap shot and probably illegal HOWEVER would any investor serioulsy beleive that the CEO of the company would send out emails as EQUITILOST? We now know that DAVID KENNEDY was outed sending postinsg tot his site under the names of BUFFETMAN, OZAB and OLMAN etc - surely no-one believes that anything has serioulsy fooled anyone under the name of EQUITILOST.

5. finally, the allegation is that some recent BORROWERS were foreclosed upon etc and that they are behind a smear campaign. Anyone out there know of any recent EQUITITRUST foreclosures?

Anyone who is serious - all they wnat are some proper answers.

 

[Olman]

Re: EquitiTrust

Nice to see ASICK posting well researched comment here - it makes a welcome change.

Concerning the Return on Subordinated Investment, this quote from an earlier post sheds a bit more light and gives a more positive understanding:

Re the Equititrust Income Fund:

....these funds for the past 3 years have been largely applied to impaired loans. There are no compensatory arrangements or fees payable to Equititrust for this facility, and they do not regain the funds foregone.

The RSI for the last 3 years has totaled in the vicinity of $40m. $30m has been applied to impaired loans, with the remainder being used to pay administrative costs over and above the annual administrative fee.

The 2010 Annual Report states impairment losses of $1.85m which is the current actual level of impairment (after application of the RSI). While any impairment is unwelcome, this figure represents .73% of the total loans. If the RSI was not applied to the impairments the level would be of greater concern.

Furthermore (with apologies for the clumsy quoting procedure - I'm still investigating the idiosyncracies of the system): (extract quoted from Olman 6th-December-2010 11:35 PM Post #40 this thread):

The $14m was the Return on the Responsible Entity's Subordinated Units (RSI) as described on p4 of the 09/10 Financial Report. The order of priority of payments (on the same page) show that these funds can only be paid if there is any surplus after actual expenses of the EIF, distributions to members, and management fees, are paid. Obviously this sum varies according to the financial circumstances in any one year, and is itself subject to the solvency of the EIF. If there is no money left after expenses, distributions and management fees, there is no return. Again, as stated in my post of 23 November, "these funds for the past 3 years have been largely applied to impaired loans. There are no compensatory arrangements or fees payable to Equititrust for this facility, and they do not regain the funds foregone". Equititrust Ltd could have legally taken these funds for their own use and left the impairments to erode the value of the subordinated investment and investors' funds. It has to be said that Equititrust's application of the RSI to impairments is a demonstrable act of good faith. (End of quote)

Another point worth mentioning is that there is a distinction between Equititrust the company, the Equititrust Income Fund, the Equititrust Priority Fund and the other sub-entities within the company. For most investors, the EIF is the major consideration. Some posters here have confused the circumstances of the EIF and the EPF. An example: the Bank of Scotland is an issue for the EPF, but has little to do with the EIF. Risk is also substantially different between the EIF and EPF: the EIF has primarily first mortgages for a lesser risk than the EPF, which does second mortgages for a higher risk/higher return.

The health of Equititrust as a whole is one thing, but care must be taken to distinguish current effects between the different elements of the company and funds.

 

[Olman]

Re: Equititrust: CYBER BULLYING - ANOTHER DIVERSION FROM THE ISSUES

1. This apppeared on the EQUITITRUST web site yesterday - a warning about cyberbullying and CEO David Kennedy - see www.equititrust.com.au

2. How would a 'cyber saboteur' get the email addresses of EQUITITRUST investors?

3. Has any INVESTOR received anythng? I haven't.

4. as per a previous POSTING on this website - the emails come from EQUITILOST@GMAIL and are signed off as David Kennedy. If true, it is a cheap shot and probably illegal HOWEVER would any investor serioulsy beleive that the CEO of the company would send out emails as EQUITILOST? We now know that DAVID KENNEDY was outed sending postinsg tot his site under the names of BUFFETMAN, OZAB and OLMAN etc - surely no-one believes that anything has serioulsy fooled anyone under the name of EQUITILOST.

5. finally, the allegation is that some recent BORROWERS were foreclosed upon etc and that they are behind a smear campaign. Anyone out there know of any recent EQUITITRUST foreclosures?

Anyone who is serious - all they wnat are some proper answers.

Ho hum - heard of hackers? People with connections and friends of influential people who are well respected in the fields of skullduggery would have no problems in spreading misinformation. It happens on here all the time.

As Joe Blow suggested recently, people who post should proofread their comments before hitting the Reply button.

Olman is not a nom de plume for Equititust. Your post is offensive and untruthful.

 

[Joe Blow]

Re: Equititrust: CYBER BULLYING - ANOTHER DIVERSION FROM THE ISSUES

We now know that DAVID KENNEDY was outed sending postinsg tot his site under the names of BUFFETMAN, OZAB and OLMAN etc - surely no-one believes that anything has serioulsy fooled anyone under the name of EQUITILOST.

I would just like to clarify a couple of points:

1. The user names that ASF were alerted to as being logged into from the same PC were "Equititrust Ltd", "Buffettman" and "Ozab". "Olman" was not one of these user names.
2. We cannot be certain that the user names "Equitrust Ltd", "Buffettman" and "Ozab" were all operated by the same individual, just that they were all logged into from the same PC.

 

[zencorp]

I think I understand all of this now - basically, Equititrust new or ought to have known what the certain dollar figure was going to be in impairments. So basically, they calculated a rate of return on the subordinate investment which would ensure that their 40m would remain whole while impairments were absorbed by the large return. I get it. & Yes I do agree - it is nice to see some solid analysis of the situation. I wonder now that given this 50m campaign has been stopped, when Equititrust expects to have the fund to return to Liquid. I guess that is why they said up to 80% of loans may be in default by the end of the year - looks like they are taking enforcement action to get cash back in. Good form - so hopefully, enforcement/litigation doesn't take to long and things are back to normal sooner rather than later. I herd along the grape line that D. Kennedy and the team were looking into getting an investment bank in - does anyone have anything constructive on this. cheers.

 

[kostag]

Re: EquitiTrust

good information that goes someway to allaying concerns

Nice to see ASICK posting well researched comment here - it makes a welcome change.

Concerning the Return on Subordinated Investment, this quote from an earlier post sheds a bit more light and gives a more positive understanding:




Furthermore (with apologies for the clumsy quoting procedure - I'm still investigating the idiosyncracies of the system): (extract quoted from Olman 6th-December-2010 11:35 PM Post #40 this thread):

The $14m was the Return on the Responsible Entity's Subordinated Units (RSI) as described on p4 of the 09/10 Financial Report. The order of priority of payments (on the same page) show that these funds can only be paid if there is any surplus after actual expenses of the EIF, distributions to members, and management fees, are paid. Obviously this sum varies according to the financial circumstances in any one year, and is itself subject to the solvency of the EIF. If there is no money left after expenses, distributions and management fees, there is no return. Again, as stated in my post of 23 November, "these funds for the past 3 years have been largely applied to impaired loans. There are no compensatory arrangements or fees payable to Equititrust for this facility, and they do not regain the funds foregone". Equititrust Ltd could have legally taken these funds for their own use and left the impairments to erode the value of the subordinated investment and investors' funds. It has to be said that Equititrust's application of the RSI to impairments is a demonstrable act of good faith. (End of quote)

Another point worth mentioning is that there is a distinction between Equititrust the company, the Equititrust Income Fund, the Equititrust Priority Fund and the other sub-entities within the company. For most investors, the EIF is the major consideration. Some posters here have confused the circumstances of the EIF and the EPF. An example: the Bank of Scotland is an issue for the EPF, but has little to do with the EIF. Risk is also substantially different between the EIF and EPF: the EIF has primarily first mortgages for a lesser risk than the EPF, which does second mortgages for a higher risk/higher return.

The health of Equititrust as a whole is one thing, but care must be taken to distinguish current effects between the different elements of the company and funds.

 

[kostag]

Re: Equititrust: CYBER BULLYING - ANOTHER DIVERSION FROM THE ISSUES

correct - you did say that - apologies

I would just like to clarify a couple of points:

1. The user names that ASF were alerted to as being logged into from the same PC were "Equititrust Ltd", "Buffettman" and "Ozab". "Olman" was not one of these user names.
2. We cannot be certain that the user names "Equitrust Ltd", "Buffettman" and "Ozab" were all operated by the same individual, just that they were all logged into from the same PC.

 

[kostag]

my advisor told me that an approach had been made to Moss Capital.

I think I understand all of this now - basically, Equititrust new or ought to have known what the certain dollar figure was going to be in impairments. So basically, they calculated a rate of return on the subordinate investment which would ensure that their 40m would remain whole while impairments were absorbed by the large return. I get it. & Yes I do agree - it is nice to see some solid analysis of the situation. I wonder now that given this 50m campaign has been stopped, when Equititrust expects to have the fund to return to Liquid. I guess that is why they said up to 80% of loans may be in default by the end of the year - looks like they are taking enforcement action to get cash back in. Good form - so hopefully, enforcement/litigation doesn't take to long and things are back to normal sooner rather than later. I herd along the grape line that D. Kennedy and the team were looking into getting an investment bank in - does anyone have anything constructive on this. cheers.

 

[zencorp]

Re: EquitiTrust

I must admit you do seem to know a lot about Equititrust. The EPIF is only available for Wholesale investors... yes? is that fund frozen as well...

Nice to see ASICK posting well researched comment here - it makes a welcome change.

Concerning the Return on Subordinated Investment, this quote from an earlier post sheds a bit more light and gives a more positive understanding:




Furthermore (with apologies for the clumsy quoting procedure - I'm still investigating the idiosyncracies of the system): (extract quoted from Olman 6th-December-2010 11:35 PM Post #40 this thread):

The $14m was the Return on the Responsible Entity's Subordinated Units (RSI) as described on p4 of the 09/10 Financial Report. The order of priority of payments (on the same page) show that these funds can only be paid if there is any surplus after actual expenses of the EIF, distributions to members, and management fees, are paid. Obviously this sum varies according to the financial circumstances in any one year, and is itself subject to the solvency of the EIF. If there is no money left after expenses, distributions and management fees, there is no return. Again, as stated in my post of 23 November, "these funds for the past 3 years have been largely applied to impaired loans. There are no compensatory arrangements or fees payable to Equititrust for this facility, and they do not regain the funds foregone". Equititrust Ltd could have legally taken these funds for their own use and left the impairments to erode the value of the subordinated investment and investors' funds. It has to be said that Equititrust's application of the RSI to impairments is a demonstrable act of good faith. (End of quote)

Another point worth mentioning is that there is a distinction between Equititrust the company, the Equititrust Income Fund, the Equititrust Priority Fund and the other sub-entities within the company. For most investors, the EIF is the major consideration. Some posters here have confused the circumstances of the EIF and the EPF. An example: the Bank of Scotland is an issue for the EPF, but has little to do with the EIF. Risk is also substantially different between the EIF and EPF: the EIF has primarily first mortgages for a lesser risk than the EPF, which does second mortgages for a higher risk/higher return.

The health of Equititrust as a whole is one thing, but care must be taken to distinguish current effects between the different elements of the company and funds.

 

[zencorp]

Do we know how much they are looking at borrowing... the same amount? 50m...?