Equititrust?

[No Trust]

Financier In Strange Web Word Fight

Financier in strange web word fight

Mitch Gaynor From: The Courier-Mail February 28, 2011

http://www.couriermail.com.au/ipad/financier-in-strange-web-word-fight/story-fn6ck2gb-1226013110857

STRANGE INDEED

Strange indeed... Strange it took this website and both The Courier Mail and The Sydney Morning Herald to highlight amongst other things Equititrust's Conflict Of Interest in trying to raise 50M dollars whilst not having declared that 80% of its loans were about to go into default, Subsequent ASIC intervention stopping the capital raising, Some 70M of loans to Dudley Quinlivan named King Con in QLD Parliament, withdrawal of Commonwealth, NAB and Bank of Scotland as lenders to the fund and more recently posting under assumed names on this website.

MEDIA ATTENTION

Whilst Equititrust does not like the media attention it has only itself to blame. Its actions, particularly lending 70M Dollars of retiree's money to Dudley Quinlivan needed to be put under the spotlight in terms of both its current investors as well as the new investors that were being encouraged to invest in the cancelled 50M capital raising only last month. What would have incoming investor's said if they knew that loans were made to KING CON and that some had been in default for up to a year as was revealed last week.

As stated before the ethical actions of Aussie Stock Forums in revealing the suspensions and multiple postings from "one" Equititrust computer is to be commended.


SYDNEY MORNING HERALD AND COURIER MAIL

Both Colin Kruger of The Sydney Morning Herald and Mitch Gaynor of The Courier Mail have done an excellent job over the last 2 months through their multiple stories on Equititrust. They have informed both current and prospective investors of matters of critical importance which Equititrust unfortunately has not.

 

[ASICK]

Re: Equititrust: not going to get anyone any money back!!

wont get any investors any money though, will it ??

Well, you have to do the best you can. ASIC is the regulator and complaints should be formally brought to ASICs notice.

I know some of you think that ASIC is an all-seeing, all-hearing, multifunctional pro-active go-get-'em laviathan, but that's far from the case - I htink it's better described as an i-dotting, t-crossing form-fill checking fixator.

My impression is that ASIC sees managers as profesionals, yet sees investors as naive and solely responbile for their own personal losses due to poor prudential choice.

But in the end, ASIC is the regulator, and the proper place to take your concerns.

By the way, this thread got a mention in the Courier Mail Online:
http://www.couriermail.com.au/business/equititrust-calls-in-private-investigator-as-web-war-of-words-escalates/story-e6freqmx-1226013111852

 

[Robin]

Wanted to check out this forum after reading the recent news articles.

Having read from start to finish I don't think I have ever seen such a concerted attempt by one or two individuals to ruin a business.

Kostag - I hope you have yourself covered - looks like they have finally had enough of your ranting! I wonder whether we are going to find out a little more about you on the front pages of the newspapers sometime soon!!

 

[ASICK]

Wanted to check out this forum after reading the recent news articles.

Having read from start to finish I don't think I have ever seen such a concerted attempt by one or two individuals to ruin a business.

Kostag - I hope you have yourself covered - looks like they have finally had enough of your ranting! I wonder whether we are going to find out a little more about you on the front pages of the newspapers sometime soon!!

My guess is that Kostag is what the media call 'a disgruntled investor' now that he's found out that the fund in which the manager redeemed $42m within months of the fund being frozen, and in which the manager took over $17m in management and other payments, is a fund in which the manager has now disclosed impairments of $42m, $30m of which had occured but were not disclosed until the end of last week.

Gee, I'd figure that's enough reason to be peeved.

I've been exactly where he (and all of you are), and it's not a pleasant feeling.

I don't think you need to bother about Kostag affecting your fund, I think the manager is doing a great job of that by itself.

 

[No Trust]

Equititrust Loans To Quinlivan

The Courier Mail Article states:

"It comes as the company acknowledged it had made large loans to a two-time former bankrupt on Gold Coast property deals.

Mr Kennedy was not employed by Equititrust when the deals were made ."

Of note, it seems the CEO is distancing himself from the loans to Dudley Quinlivan which were made prior to his employment.


Any company which is the custodian of public money will be subject to scrutiny including its lending practices which have a direct impact on investors. The revelations about substantial loans to Quinlivan came to light from media scrutiny. The Sydney Morning Herald and The Courier Mail has given both current and prospective investors a transparent view of the lending practices of the company to date.

 

[kostag]

Re: Equititrust Loans To Quinlivan: be fair to David Kennedy

I have been tough on DAVID KENNEDY however you cannot blame him for wanting to qualify the fact that he did not make the loan to QUINLIVIN and I dare say that neither he nor David Andersen made any of the 22 disaster loans that now comprise 90% of the assets of the company. That is not the aspect of their conduct that has dissapointed.

These disasterous loans (whihc obvioulsy go back pre 2009) may explain Wayne MacIvor and Tom Haney deciding it was a good time to jump ship in May 2010, though.

The Courier Mail Article states:

"It comes as the company acknowledged it had made large loans to a two-time former bankrupt on Gold Coast property deals.

Mr Kennedy was not employed by Equititrust when the deals were made ."

Of note, it seems the CEO is distancing himself from the loans to Dudley Quinlivan which were made prior to his employment.


Any company which is the custodian of public money will be subject to scrutiny including its lending practices which have a direct impact on investors. The revelations about substantial loans to Quinlivan came to light from media scrutiny. The Sydney Morning Herald and The Courier Mail has given both current and prospective investors a transparent view of the lending practices of the company to date.

 

[Robin]

Having read this current thread in detail, I believe the forum needs to take a closer look at its conduct guide.

The rules clearly state that excessive ramping of stocks is strictly prohibted. However there seems to be absolutely no regulation as to excessive and cordinated attacks.

It is quite obvious from the numerous threads from Konstag and No Trust that they have an alterior motive. If they are investors, then surely they would be more interested in taking their complaints a more private route otherwise they risk destroying their own investment.

If they are borrowers of money from Equititrust, then the only conceivable reason for their concerted and cordinated attack would be revenge. You might be forgiven for thinking that perhaps their investment has not gone to plan.

The only other possibility in my mind for such excessive behaviour might be that they are journalists without their own official / formal outlet. If this was found to be the case then I am certain they would quickly lose the public's vote for their excessively agressive approach.

Whatever their agenda might be, I do feel that they have been vindictive and excessive and only loosely interested in the facts. Does the manager of this forum really want to encourage what may after official investigation, maybe deem to be criminal conduct? I think it might be a close call if Equititrust decides to take its investigation the full distance.

Before either Konstag and/or No Trust ask, I am not an investor in Equititrust, an employer of Equititrust or a Client of Equititrust.

 

[doctorj]

Having read this current thread in detail, I believe the forum needs to take a closer look at its conduct guide.

In fact, the forum has quite a well developed set of standards already in place to deal with this situation. If you, or anyone else, have grounds to believe a specific post is false or misleading, please avail of the post reporting function to draw it to the attention of our moderators who will investigate in short order. That said, the quantity of posts made by one or more individuals on a topic is usually irrelevant and each post will be judged fairly on its own merits.

I should also point out that this is a stance that ASF takes on all its threads. The internet is a real-time medium and sometimes mistakes occur, but with the help of our users to highlight errors we hope to increase the information value for all by removing factually incorrect information as quickly as possible.

This thread is obviously particularly passionate and active. In order to not take it any further off topic, I would ask that should you want to discuss this further, that you would please do so via private messaging. I'm happy to answer any questions you may have.

 

[GumbyLearner]

In fact, the forum has quite a well developed set of standards already in place to deal with this situation. If you, or anyone else, have grounds to believe a specific post is false or misleading, please avail of the post reporting function to draw it to the attention of our moderators who will investigate in short order. That said, the quantity of posts made by one or more individuals on a topic is usually irrelevant and each post will be judged fairly on its own merits.

I should also point out that this is a stance that ASF takes on all its threads. The internet is a real-time medium and sometimes mistakes occur, but with the help of our users to highlight errors we hope to increase the information value for all by removing factually incorrect information as quickly as possible.

This thread is obviously particularly passionate and active. In order to not take it any further off topic, I would ask that should you want to discuss this further, that you would please do so via private messaging. I'm happy to answer any questions you may have.

I'll second that. There is nothing like the feeling of getting ripped off.

 

[No Trust]

Re: Equititrust

There seems to be a severe sensitivity by Equititrust and or its supporters / employees to the reporting by the media on various issues. The fact that, what is in the public space, is discussed and referred to on this forum is called free speech and it is legal to do so..

The same applies to reporting in the media. If the company has any issues with the accuracy of stories published the publisher can be asked to correct or retract the story.

The frequency of media articles relating to the company in recent months is what has precipitated the "public's interest" and vigorous discussion on this thread which the Equititrust and its staff have participated in.. When a company raises money from the public "it is in the public interest"..

As the moderator correctly states, "if anyone has grounds to believe a specific post is false or misleading, please avail of the post reporting function to draw it to the attention of our moderators". That option is open to everyone..

It seems that “Robin” does not have a grasp of the Uniform Defamation Laws enacted across Australia in 2006 which effectively enshrines the right to free speech which is afforded by this web site..

 

[ASICK]

Re: Equititrust

There seems to be a severe sensitivity by Equititrust and or its supporters / employees to the reporting by the media on various issues. The fact that, what is in the public space, is discussed and referred to on this forum is called free speech and it is legal to do so..

The same applies to reporting in the media. If the company has any issues with the accuracy of stories published the publisher can be asked to correct or retract the story.

The frequency of media articles relating to the company in recent months is what has precipitated the "public's interest" and vigorous discussion on this thread which the Equititrust and its staff have participated in.. When a company raises money from the public "it is in the public interest"..

As the moderator correctly states, "if anyone has grounds to believe a specific post is false or misleading, please avail of the post reporting function to draw it to the attention of our moderators". That option is open to everyone..

It seems that “Robin” does not have a grasp of the Uniform Defamation Laws enacted across Australia in 2006 which effectively enshrines the right to free speech which is afforded by this web site..

Members of damaged funds should never been concerned about voicing their complaints on forums such as this. Members should not feel intimidated.

Keep to the facts and don't worry about speculating too much.

Non-disclosure of fund loan impairments and the manager's exit strategy for the $42m are issues you should be looking at as carefully as possible.

How is it possible for a manager to take $17m in fees and then within just a few months, the fund suffers substantial losses?

Where is your fund's auditor?

 

[ASICK]

THE BIG WHEEL AT STAR CITY CASINO

http://www.smh.com.au/money/super-and-funds/consumers-vulnerable-20110301-1bcbb.html

''... There was much backslapping and self-congratulation among officialdom after it become apparent that Australia was to be spared the worst of the financial crisis. Our regulators were credited with doing a good job.

However, there were tens of thousands of victims, mostly retirees, of poor or dodgy investment schemes and financial advice extending further back than just the past few years. The apologists for the big end of town tend to apportion most of the blame to the victims - saying it's the investors' fault if they get caught out and should not expect regulators to come to the rescue.

That's nonsense. The losses experienced by small investors have not come about just because of market crashes, or because they were ripped off by someone operating outside the law. The losses have come because of shonky operators who have been licensed by ASIC and have been operating right under the regulator's nose.

Australia remains the wild west of ''innovative'' financial products - fee-laden, opaque products that never should be allowed anywhere near small investors. There is absolutely nothing stopping anyone, for example, from gaining a financial services licence and then putting investors' money on the big wheel at Crown or Star City Casino. ...''

 

[kostag]

Re: THE BIG WHEEL AT STAR CITY CASINO

ASICK you are even more cynical than I am - you must have lost some serious $$$$$

http://www.smh.com.au/money/super-and-funds/consumers-vulnerable-20110301-1bcbb.html

''... There was much backslapping and self-congratulation among officialdom after it become apparent that Australia was to be spared the worst of the financial crisis. Our regulators were credited with doing a good job.

However, there were tens of thousands of victims, mostly retirees, of poor or dodgy investment schemes and financial advice extending further back than just the past few years. The apologists for the big end of town tend to apportion most of the blame to the victims - saying it's the investors' fault if they get caught out and should not expect regulators to come to the rescue.

That's nonsense. The losses experienced by small investors have not come about just because of market crashes, or because they were ripped off by someone operating outside the law. The losses have come because of shonky operators who have been licensed by ASIC and have been operating right under the regulator's nose.

Australia remains the wild west of ''innovative'' financial products - fee-laden, opaque products that never should be allowed anywhere near small investors. There is absolutely nothing stopping anyone, for example, from gaining a financial services licence and then putting investors' money on the big wheel at Crown or Star City Casino. ...''

 

[ASICK]

Re: THE BIG WHEEL AT STAR CITY CASINO

ASICK you are even more cynical than I am - you must have lost some serious $$$$$

Kostag, $'s are $'s - loss is the issue. The article was written by the SMH, not me.

If you read the whole article, you'll see the SMH is extremely cynical.

I've just had the experience of going thru all this before you have - I would say that most investors in your fund are still in the 'wishful thinking' stage, where you fear the worst, yet hope for the best.

My only hope for you is that you don't go to the next stage, which is coming to grips with loss ... then acceptance .. and then doing something about it.

My guess'll be that you guys start losing interest payments due to no income into your fund - it's just a gues

 

[No Trust]

Equititrust - Loans to Dudley Quinlivan

Another Frozen Gold Coast Mortgage Fund has loaned money to Dudley Quinlivan..

Receivers move on former bankrupt Dudley Quinlivan's Gold Coast canal-front home Mitch Gaynor From:

The Courier-Mail March 02, 2011


http://www.couriermail.com.au/prope...coast-front-home/story-e6frequ6-1226014399570

Will the spivvy Gold Coast ever learn..

 

[kostag]

Re: Equititrust - Loans to Dudley Quinlivan EQUITITRUST AND SHAKESPEARE HANEY

THis is all very very incestous. Until May of 2010, Mr Haney was also a Director of EQUITITRUST!!!!! If you look closely at the financial accounts you will see that Shakespeare Haney loaned moneys to EQUITITRUST at one stage.

How indepdendent could this Board have been!!!

The Courier-Mail revealed two Quinlivan companies, Croftworth Property Holdings (No.1 and No.2) borrowed what is believed to be millions of dollars from the $240 million Equititrust Income Fund.

EIF froze redemptions in its fund because of the global financial crisis and is speaking to administrators of Croftworth this week to see what assets it can pursue as creditors.

Just like EIF, Shakespeare Haney also froze redemptions to investors.

However, it did write to investors offering to release up to $10 million of its $145 million fund last October.

According to its 2010 annual report, the fund suffered $16 million in impairment losses, with auditor KPMG saying there was a "significant doubt about the scheme's ability to continue as a going concern".

It is understood millions of dollars are tied up in loans after Shakespeare loaned money to both Pegasus and Sandtrend.

Another Frozen Gold Coast Mortgage Fund has loaned money to Dudley Quinlivan..

Receivers move on former bankrupt Dudley Quinlivan's Gold Coast canal-front home Mitch Gaynor From:

The Courier-Mail March 02, 2011


http://www.couriermail.com.au/prope...coast-front-home/story-e6frequ6-1226014399570

Will the spivvy Gold Coast ever learn..

 

[kostag]

Re: Equititrust: FINANCIERS

Talk in the general market place is that Bank of Scotland and National Bnak are both at the end of the road in terms of supporting the EIF etc. There was a rumour that Deutschbank who is a major funder to LM Mortgage Managment also was approcahed but declined, as was the case with Bill Moss' very credible Moss Capital.

All only rumours however INVESTORS have a legitimate right to know - if their Manager will not tell them - who might pop us the financier ranking ahead of them!

I suspect after the CITY PACIFIC imbroglio that both the EIF's bankers would be loathe to be seen as widning up the find and then investors blaming them (the Banks) when the losses start to roll in.

Based on prior disclosures and commentary, based on a $250million loan book with 22 loans (90%) of the book in 'mortgagee in possession' status, we can all assume (in light of the Manager not revealing this key data) that a) none of the 22 loans actually pay any interest ie: 10% of the loan book pays interest - lets say $25Million at 10% - so $2.5Million a year in cash income - to service bank debts of $50million, investors of how much $200million+, plus Equititrust's management fee grab of $15million+. Therefore, ASICK is right, can only be getting paid by capital therefore the income we think we get is our own capital back! A mess!

And secondly, taking the Quinlivan loans as an example - a $40-$50million write off - are we looking at losses of up to $100million on $250million of loans. After paying the Banks out and meeting costs of sale, GST etc - does that leave INVESTORS with how much? 45cents in the dollar?

I accept that all my calculations are speculative and could be wide of the mark. I just ask, can someone show me where we are widely off the mark?

 

[ASICK]

Fund's 30 June 2010 finacials, page 17, "... The existing finance facility of $35,000,000 is a principal and interest reduction facility that is secured over the Scheme’s mortgage loans and expires on 31 August 2012. The facility of $35,000,000 was fully utilised at 30 June 2010 (2009:$64,000,000) with nil unutilised facilities available (2009: $249,135). Interest is charged at a variable rate. At year end the weighted effective average interest rate on this facility was 9.03% per annum (2009: 6.63%). ..."

The fund's December 2010 RG45 discloses the facility to be paid down to $26m.

9% on $26m (or more? since the mid-term financials are not yet released) is a lot of interest to pay for a fund suffering substantial impairments and seemingly not much income to speak of.

There is an increased risk of the options available to the facility provider being exercised - see paragraphs (a), (b), and (c) in the excerpt below.

Fund's 30 June 2010 financials, page 17, "... Loans and borrowings are subject to maintaining certain loan covenants. One of the current covenants is to
maintain a set debt to eligible asset ratio percentage of 25.0% (2009: 27.5%). If the debt to eligible asset ratio is exceeded and not rectified within 14 days the finances are entitled to review the facilities and may decide to do all or any of the following:
(a) by notice to the borrower declare the secured money immediately due and payable, and the borrower shall immediately pay the secured money;
(b) by notice to the borrower cancel the commitment;
(c) at the cost of the borrower, appoint a firm of independent accountants or other experts to review and report to the lender on the affairs, financial condition and business generally of the borrower and the Scheme.
At 30 June 2010, the debt ratio was 20.59% (2009:26.35%). ..."

I think this is very worrying:-

February 2010 continuous disclosure statement dated 18 February 2011, page 4, "... Historically, for most development loans and some commercial loans undertaken by the Fund, we have capitalised interest, as this is the nature of the lending performed by the Fund, whereby the interest is included in the loan facility and deducted progressively. Over the past three months, however, we have, with few exceptions, stopped the capitalisation of interest so as to allow the loan to go into default and thus enable Equititrust to take enforcement action for the control of it. ..."

Ah! capitalized interest - Cash flow? what cash flow?

I think members should also keep in mind that the $28m of capital warranty remaining in the fund, as I understand it, is not a guarantee of interest/distribution payments to investors. These are the times when I think the auditor for the fund should step forward and assure investors that interest/distribution payments to investors are derived from discernible profits. After all, the auditors are engaged by the fund, not by the manager - in essence, the auditors responsibility is to report to investors.

So, with loans in default, lack of income in the fund, high facility costs, the burden of management fees, and a slow market for particular assets, what will the facility provider do? (a), or (b), or (c), or none of the above?

As an aside, has anyone reconciled the December 2010 RG45 dated December 2010 report with the continuous disclosure statement dated 18 February 2010 with respect to the LVR table and to the cash flow projections given the newly discloses impairments and the manager's action to cause loans to default rather than capitalize interest? (since they both relate to the fund's performance as at 30 December 2010)

 

[ASICK]

Re: Equititrust: FINANCIERS

... plus Equititrust's management fee grab of $15million+. ...

Kostag, the fee grab was for the 12 months up to 30 June 2010 and was about $17m (which included about $13m in returns on the capital warranty)

The management fee is about $4m - since losses have eaten into the capital warranty, I couldn't imagine the manager getting a return on the remaining $28m as at 31 December 2010.

 

[kostag]

Re: Equititrust: when is INCOME NOT INCOME? nothing up my sleeve! Voila..... income!

Interesting excerpt from an interview by Brian Gaynor of Mark Hotchin ex-Hanover boss - another failed second tier financer.....

They have the same 'capitalised interest' trick - great on paper - not too good in the bank though and they had the same accounting regime of big dividend grab and no actual cash flow to speak of.....

It appears that $31.5 million of the dividends was used to repay loans, and the other $37 million of related loan repayments came from other sources.

The huge dividend payments should not have been made because the finance company sector was in trouble and Hanover's profits were essentially illusory because most of its interest income was capitalised interest, which is a non-cash item.

It is also illusory for Hotchin to claim that for every $1 that went out $2 went in.

The reality of the situation up to June 2008 was:

Watson and Hotchin companies took $117.8 million out of Hanover Finance in related party loans.

They then received dividends of $45.5 million.

They paid back related party loans of $68.5 million.

ASICK has raised some interesting material. From what he says it is likley that both KPMG the auditors and any insolvency firm who has done an INDEPENDENTS ACCOUNTANTS REPORT on Equititrust for either National Bank or Bank of Scotland, would have first hand knowledge of the CASH FLOW (or lack thereof) of EQUITITRUST.

Now, I raise this in this PUBLIC FORUM because all INVESTORS should be now aware that it is LIKLEY that their INTEREST PAYMENTS are in fact being funded from CAPITAL. There does not seem to be any prospect that EQUITITRUST has the income cash flow to cover these paymments. Likewise, the BANK facilities' and their interest are more than likley being paid out of OUR capital.

Now, if that is the case and their advisers including the AUDITORS KPMG are aware of this - then they are all on PUBLIC NOTICE and they would be joined in any proceedings in the event of any CAPITAL shortfall.

You (the EQUITITRUSTS'S BANKERS AND THEIR ADVISERS + AUDITORS) cannot have knowledge that there is a cash problem and just grab the money and run and leave the Mum and Dad investors hanging. It is not some game of business finders / keepers.

INVESTORS - we dont know what is going on however the foregoing seems a likley scenario and we ought be aware and thevarious large lenders ought be aware (as well as their advisors) that they cannot just sit on this knowledge whilst they sort out their own nests and think that we all have no rights of redress ro recovery.

ASIC take note!