Equititrust?
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LOOK IN THE 2009 ACCOUNTS - look, nothing up my sleeves!
Now, I am not an accountant and call me stupid if you like - but look at NOTE 4 - there in sub-ordinated units is an 'application' by McIvor for $40,300,000 of units - now, is this the 'entry' that McCullough Robertson sanctioned - anyhow, in that same year - whammo! withdrawals - in cash - $42,403,370!
Our am I mis-rading this obscure note?
So, if this is right, the EIF was stripped a year ago. If I am wrong - I owe everyone a sincere apology!!!
Any how - despite this - the EIF still paid a huge return in 2010 on the sub-rdinated fund - when in fact, there was (on my reckoning) no sub-rdinated fund at all.
Mr Steer at KPMG, please explain why the note 4 does not describe what the 'application' of $40,300,000 in 30-6-09 year was all about? was it a $40,300,000 cash application or just another 'journal entry' ???
ASIC, Piper Alderman, National Bank - take note.....
[/B]
Why were investors’ not made aware of this????? Why were investors not given independent legal advice on this critical change??? Wasn't the advice from the company's own lawyers a HUGE conflict of interest particularly if investors were kept in the dark.
It’s definitely time for investors to kick these incompetent self interested idiots out, install a new manager and start an inquiry as to what happened behind the scenes of this very murky affair...
I encourage all investors to contact Piper Alderman and join the class action as soon as possible..[/QUOTE]
Now, I am not an accountant and call me stupid if you like - but look at NOTE 4 - there in sub-ordinated units is an 'application' by McIvor for $40,300,000 of units - now, is this the 'entry' that McCullough Robertson sanctioned - anyhow, in that same year - whammo! withdrawals - in cash - $42,403,370!
Our am I mis-rading this obscure note?
So, if this is right, the EIF was stripped a year ago. If I am wrong - I owe everyone a sincere apology!!!
Any how - despite this - the EIF still paid a huge return in 2010 on the sub-rdinated fund - when in fact, there was (on my reckoning) no sub-rdinated fund at all.
Mr Steer at KPMG, please explain why the note 4 does not describe what the 'application' of $40,300,000 in 30-6-09 year was all about? was it a $40,300,000 cash application or just another 'journal entry' ???
ASIC, Piper Alderman, National Bank - take note.....
[/B]
Why were investors’ not made aware of this????? Why were investors not given independent legal advice on this critical change??? Wasn't the advice from the company's own lawyers a HUGE conflict of interest particularly if investors were kept in the dark.
It’s definitely time for investors to kick these incompetent self interested idiots out, install a new manager and start an inquiry as to what happened behind the scenes of this very murky affair...
I encourage all investors to contact Piper Alderman and join the class action as soon as possible..[/QUOTE]
INFORMATION REQUEST: OPEN LETTER TO MR P STEER AT KPMG
Mr Steer,
KPMG - Gold Coast
I am an investor in Equititrust ('EIF').
Attention has been drawn to Note 4 in the 2008-09 financial statements audited by your firm.
The note indentifies as an amount of $40,300,000 as being applied for as 'subordinated units'.
Subject to any contrary note or advice, this would appear to represent that some party applied for and was allotted 40,330,000 of sub-dordinated units, which by general definition and historical implication, were applied for in cash.
Were these units applied for in cash?
If not, then on what basis were they issued. In the interests of proper and honest disclosure, why wasn't there some note to investors as to any special circumstances surrounding their issue?
You would be aware that the financial accounts of EIF are posted on the responsible entities web site. In fact, they are still posted there today.
The public and other third parties rely upon these financial statements and their accuracy in making investment decisions. Many made a positive investment decision based upon the representation that stakeholders held a considerable cash investment in the EIF, such being subordinated to the units allotted to the public.
The importance of this particular issue is also:-
1. Further, I now understand that after certain recent impairment write downs, the balance of the subordinated units is down to some $25Million. If that is true and if the 2008/2009 allotment of $40,300,000 was not in cash, the practical effect is that the stakeholders themselves have an 'ovderdrawn' position of at least $15Million - not an equity of $25Million.
2. In 2008/2009 and again in 2009/2010 and presumably in the first half of 2010/2011, the stakeholders continued to draw a very lucrative return on the subordinated units (as high as 39% in 2009/2010). The justification for this high return was stated a being the risk of it and the fact that it stood behind all other investors. If in fact the investment is not a cash investment at all, then such high return paid and the justification of same, is clearly false.
Once more , investors and more than likely financiers etc, relied upon these published accounts.
Your full and frank reply would be appreciated.
Harry.
Mr Steer,
KPMG - Gold Coast
I am an investor in Equititrust ('EIF').
Attention has been drawn to Note 4 in the 2008-09 financial statements audited by your firm.
The note indentifies as an amount of $40,300,000 as being applied for as 'subordinated units'.
Subject to any contrary note or advice, this would appear to represent that some party applied for and was allotted 40,330,000 of sub-dordinated units, which by general definition and historical implication, were applied for in cash.
Were these units applied for in cash?
If not, then on what basis were they issued. In the interests of proper and honest disclosure, why wasn't there some note to investors as to any special circumstances surrounding their issue?
You would be aware that the financial accounts of EIF are posted on the responsible entities web site. In fact, they are still posted there today.
The public and other third parties rely upon these financial statements and their accuracy in making investment decisions. Many made a positive investment decision based upon the representation that stakeholders held a considerable cash investment in the EIF, such being subordinated to the units allotted to the public.
The importance of this particular issue is also:-
1. Further, I now understand that after certain recent impairment write downs, the balance of the subordinated units is down to some $25Million. If that is true and if the 2008/2009 allotment of $40,300,000 was not in cash, the practical effect is that the stakeholders themselves have an 'ovderdrawn' position of at least $15Million - not an equity of $25Million.
2. In 2008/2009 and again in 2009/2010 and presumably in the first half of 2010/2011, the stakeholders continued to draw a very lucrative return on the subordinated units (as high as 39% in 2009/2010). The justification for this high return was stated a being the risk of it and the fact that it stood behind all other investors. If in fact the investment is not a cash investment at all, then such high return paid and the justification of same, is clearly false.
Once more , investors and more than likely financiers etc, relied upon these published accounts.
Your full and frank reply would be appreciated.
Harry.
No Trust
JUSTICE IS COMING...
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Unit Value Disaster
Ugly, very Ugly indeed... This is just an estimate it may end up being much much worse..
Get rid of these idiots and vote in a new manager so all the evidence can be revealed about their involvement with "King Con". That way 100% of the money can be recovered by taking legal action against the directors..
http://www.equititrust.com.au/Pdfs/Disclosures/EIF Unit Value - 20 June 2011.pdf
Nice work EquitiRust
Ugly, very Ugly indeed... This is just an estimate it may end up being much much worse..
Get rid of these idiots and vote in a new manager so all the evidence can be revealed about their involvement with "King Con". That way 100% of the money can be recovered by taking legal action against the directors..
http://www.equititrust.com.au/Pdfs/Disclosures/EIF Unit Value - 20 June 2011.pdf
Nice work EquitiRust
INDEPENDENT BOARD
EIF makes much noise about an independent Board etc in place etc - on the face of it - this appears to be the case..... BUT is it?
does any subscriber to this web site know of any business connections and or relationships between any of the 'independent Directors' and :-
a) Mark McIvor
b) MM Holdings
c) Equititrust
d) any employee of Equititrust
e) or one Director with another,
which ought be disclosed?
I have been told that there is some link between certain parties and certain loan facilities with an entity called SECURCORP at Airlie Beach, which brings certain parties into conflict.
EIF makes much noise about an independent Board etc in place etc - on the face of it - this appears to be the case..... BUT is it?
does any subscriber to this web site know of any business connections and or relationships between any of the 'independent Directors' and :-
a) Mark McIvor
b) MM Holdings
c) Equititrust
d) any employee of Equititrust
e) or one Director with another,
which ought be disclosed?
I have been told that there is some link between certain parties and certain loan facilities with an entity called SECURCORP at Airlie Beach, which brings certain parties into conflict.
THEY NOW ADMIT ATLEAST 22% OF OUR MONEY LOST......
well, there we have it PRIOR to selling and holding costs - units are down to 78cents as at 20-6-11 - see link below.....
http://www.equititrust.com.au/Pdfs/Disclosures/EIF Unit Value - 20 June 2011.pdf
sales costs - 3% legal costs 1%? funding costs whilst sales happen %? opertaing overheads at the McIvorbunker %?
40% loss looking close to the money?
I think so.
Interesting - this current disclosure still asserts their $40M subordinated investment - which if NOTE 4 in the 2008/09 accounts is correct - $40,300,000 of subordinated units seems to me, anyway, to be created out of thin air. So what is a loss when you didn't put the money in? Probably our loss somehow....... KPMG will have to face that one
Secondly, this time , no-one seemed prepared to sign the ANNOUCEMENT ..... it seems with these commercial 'jockeys' that good news comes (rapidly) by horse, and bad news comes by foot.....
it isn't going to get any better now, I am afraid - come on NAB or Bank of Scotland - ASIC ?? lets get McGrath Nicholl in to this place, and give it a quick and decent burial - the carcass is starting to smell....
well, there we have it PRIOR to selling and holding costs - units are down to 78cents as at 20-6-11 - see link below.....
http://www.equititrust.com.au/Pdfs/Disclosures/EIF Unit Value - 20 June 2011.pdf
sales costs - 3% legal costs 1%? funding costs whilst sales happen %? opertaing overheads at the McIvorbunker %?
40% loss looking close to the money?
I think so.
Interesting - this current disclosure still asserts their $40M subordinated investment - which if NOTE 4 in the 2008/09 accounts is correct - $40,300,000 of subordinated units seems to me, anyway, to be created out of thin air. So what is a loss when you didn't put the money in? Probably our loss somehow....... KPMG will have to face that one
Secondly, this time , no-one seemed prepared to sign the ANNOUCEMENT ..... it seems with these commercial 'jockeys' that good news comes (rapidly) by horse, and bad news comes by foot.....
it isn't going to get any better now, I am afraid - come on NAB or Bank of Scotland - ASIC ?? lets get McGrath Nicholl in to this place, and give it a quick and decent burial - the carcass is starting to smell....
No Trust
JUSTICE IS COMING...
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Independent Board
The board is not independent in any way... David Tucker, I have been informed today, acts for both McIvor in a personal capacity as well as MM Holdings...
How can ASIC allow this to continue???? When it comes to a vote on the future manager this will be brought to the attention of investors. I do not know why they continue with this farce and try to pull the wool over investor's eyes, as there is clear and unequivocal evidence to prove this link.
I guess they feel whilst the company is in its death throes, it’s worth trying anything as a last shot. However this last shot mentality is at the cost of innocent retiree's investor's money. All the more reason for the management to be handed over to someone independent who will have the investor’s welfare as a first priority.
LETS GET TO THE BOTTOM OF THE KING CON LOANS ONCE AND FOR ALL...
The board is not independent in any way... David Tucker, I have been informed today, acts for both McIvor in a personal capacity as well as MM Holdings...
How can ASIC allow this to continue???? When it comes to a vote on the future manager this will be brought to the attention of investors. I do not know why they continue with this farce and try to pull the wool over investor's eyes, as there is clear and unequivocal evidence to prove this link.
I guess they feel whilst the company is in its death throes, it’s worth trying anything as a last shot. However this last shot mentality is at the cost of innocent retiree's investor's money. All the more reason for the management to be handed over to someone independent who will have the investor’s welfare as a first priority.
LETS GET TO THE BOTTOM OF THE KING CON LOANS ONCE AND FOR ALL...
What a difference just 5 months brings!
http://www.equititrust.com.au/Pdfs/MM Investor Letter JAN 2011.pdf
Unfortunately for us , despite Equititrust's masterful use of spin doctoring and analogies..... they have had enormous difficulty in levelling with us......
it seems that their spin arrived by horse, and the reality was swept away by the bagful (manure, that is) - to exploit another of their trite little quotations....
in relation to their love of all things 'Einstein' - you don't have to be Einstien to work out what has gone on here - do you?
in terms of Board independence, I think that all investors are entitled to an honest and open disclosure of associations and interests between themslves and then between themselves and the interests of the major shareholder, who is also, by our reckoning, the only unitholder, with a negative balance - ie: purported investment $25M less: non cash allotmnet of units 2009 (see note 4 2009 financials) = $15M overdrawn. Phew, wasn't their timing lucky!
Finally - the auditors - KPMG : in relation to open letter sent to them re disclosure and Note 4 in the 2009 accounts - it seems that the cat may have got the tongue. Maybe if David Kennedy gets his old job back at KPMG , he can help them with some spin.
and finally, finally - why did they shut down those classic Ian Maurice youtubes with the 'Matt and Mark' tap dancing show..... we had them playing on the large screen in the bar - classic stuff - couldn't get off the floor! I wanted to start selling tickets , to recoup some of the investment losses..... but then again that 'not for profit' concept seemed like a dousy - I'd probably have been stupid enough to stump up again. Surely not, you say! I don't know, almost bought into the premium $50M fund in January this year. How lucky am I?
Anyhow, when Ian nearly choked trying to hold back his laughter.....I had tears running down my face, classic stuff.
I loved the bit where Maurice asks about Board credential and tweedle dee answers ' 'we have a china man on the board.... they know china' or something like that.....wow. They probably haven't herad of Equititrust in China - and if there really is one born every minute - with 1billion people on hand, the odds are looking OK...
Anyone manage to get a copy of the youtube before Ian pulled it off air???- I'd like to get some mugs and TShirts printed to go with the DVD copies. What a Xmas present! I know 1600 people who'd probably grab a set.....
http://www.equititrust.com.au/Pdfs/MM Investor Letter JAN 2011.pdf
Unfortunately for us , despite Equititrust's masterful use of spin doctoring and analogies..... they have had enormous difficulty in levelling with us......
it seems that their spin arrived by horse, and the reality was swept away by the bagful (manure, that is) - to exploit another of their trite little quotations....
in relation to their love of all things 'Einstein' - you don't have to be Einstien to work out what has gone on here - do you?
in terms of Board independence, I think that all investors are entitled to an honest and open disclosure of associations and interests between themslves and then between themselves and the interests of the major shareholder, who is also, by our reckoning, the only unitholder, with a negative balance - ie: purported investment $25M less: non cash allotmnet of units 2009 (see note 4 2009 financials) = $15M overdrawn. Phew, wasn't their timing lucky!
Finally - the auditors - KPMG : in relation to open letter sent to them re disclosure and Note 4 in the 2009 accounts - it seems that the cat may have got the tongue. Maybe if David Kennedy gets his old job back at KPMG , he can help them with some spin.
and finally, finally - why did they shut down those classic Ian Maurice youtubes with the 'Matt and Mark' tap dancing show..... we had them playing on the large screen in the bar - classic stuff - couldn't get off the floor! I wanted to start selling tickets , to recoup some of the investment losses..... but then again that 'not for profit' concept seemed like a dousy - I'd probably have been stupid enough to stump up again. Surely not, you say! I don't know, almost bought into the premium $50M fund in January this year. How lucky am I?
Anyhow, when Ian nearly choked trying to hold back his laughter.....I had tears running down my face, classic stuff.
I loved the bit where Maurice asks about Board credential and tweedle dee answers ' 'we have a china man on the board.... they know china' or something like that.....wow. They probably haven't herad of Equititrust in China - and if there really is one born every minute - with 1billion people on hand, the odds are looking OK...
Anyone manage to get a copy of the youtube before Ian pulled it off air???- I'd like to get some mugs and TShirts printed to go with the DVD copies. What a Xmas present! I know 1600 people who'd probably grab a set.....
No Trust
JUSTICE IS COMING...
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Stupid Videos
It looks like Ian Maurice got rapped over the knuckles for posting the secret Equititrust / McIvor agenda online...
I believe there are copies floating around in the correct hands, with a direct link sent to ASIC the moment they were posted online…
Idiots….
It looks like Ian Maurice got rapped over the knuckles for posting the secret Equititrust / McIvor agenda online...
I believe there are copies floating around in the correct hands, with a direct link sent to ASIC the moment they were posted online…
Idiots….
Ian Maurice could re-badge these videos as 'Dumb and Dumber'
what a series - we need to take this to the big screen.....
what a series - we need to take this to the big screen.....
No Trust
JUSTICE IS COMING...
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Wanted Returns? Well, You Got Them
Wanted returns? Well, you got them
Scott Rochfort
Sydney Morning Herald
June 23, 2011.
Quote
CBD
"The Gold Coast fund manager Equititrust has found an innovative way of demonstrating its claim of having ''pioneered unprecedented, industry leading capital protection initiatives for [its] investors''.
In its latest update, Equititrust put a positive spin on the book value of the units in its loss-making flagship mortgage fund stumbling from $1 to 78 ¢.
Investors in the Equititrust Income Fund, rather than earning monthly distributions, discovered from the update that they have been getting capital returns for the past few months.
''Accordingly, as EIF has no income to distribute, the ordinary monthly payments received by investors in the period 2 July 2010 to 29 March 2011 are all partial repayments of capital and, therefore, are not income and will not need to be included in the assessable income in an investor's tax return for the current year,'' said the update.
The latest valuation is from April 30 and does not include the current review of the fund's loan book.
''Operating costs, including future bank interest and the costs incurred in managing the fund, have not been recognised in this calculation and equally further income earned from interest during the realisation process has also not been recognised,'' Equititrust said in relation to its latest valuation.
Equititrust founder Mark McIvor and chief executive David Kennedy quit as directors of the fund last week.
The company, however, has yet to get around to updating its website. ''Established in 1999, the Equititrust Income Fund provides you with excellence in monthly and annual income,'' says a blurb on the site.
''The fund offers you the opportunity to invest in a senior investment position backed by Equititrust's own capital protection investment.'' End Quote
http://www.smh.com.au/business/wanted-returns-well-you-got-them-20110622-1gffg.html
Its good to see the national press exposing these Gold Coast Cowboys... Lets hope that they are not given the opportunity flush further funds down the toilet....
Equititrust needs to be removed as the manager of the fund immediately...
Wanted returns? Well, you got them
Scott Rochfort
Sydney Morning Herald
June 23, 2011.
Quote
CBD
"The Gold Coast fund manager Equititrust has found an innovative way of demonstrating its claim of having ''pioneered unprecedented, industry leading capital protection initiatives for [its] investors''.
In its latest update, Equititrust put a positive spin on the book value of the units in its loss-making flagship mortgage fund stumbling from $1 to 78 ¢.
Investors in the Equititrust Income Fund, rather than earning monthly distributions, discovered from the update that they have been getting capital returns for the past few months.
''Accordingly, as EIF has no income to distribute, the ordinary monthly payments received by investors in the period 2 July 2010 to 29 March 2011 are all partial repayments of capital and, therefore, are not income and will not need to be included in the assessable income in an investor's tax return for the current year,'' said the update.
The latest valuation is from April 30 and does not include the current review of the fund's loan book.
''Operating costs, including future bank interest and the costs incurred in managing the fund, have not been recognised in this calculation and equally further income earned from interest during the realisation process has also not been recognised,'' Equititrust said in relation to its latest valuation.
Equititrust founder Mark McIvor and chief executive David Kennedy quit as directors of the fund last week.
The company, however, has yet to get around to updating its website. ''Established in 1999, the Equititrust Income Fund provides you with excellence in monthly and annual income,'' says a blurb on the site.
''The fund offers you the opportunity to invest in a senior investment position backed by Equititrust's own capital protection investment.'' End Quote
http://www.smh.com.au/business/wanted-returns-well-you-got-them-20110622-1gffg.html
Its good to see the national press exposing these Gold Coast Cowboys... Lets hope that they are not given the opportunity flush further funds down the toilet....
Equititrust needs to be removed as the manager of the fund immediately...
No Trust
JUSTICE IS COMING...
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Illegal Change of Constitution
It seems others have attempted to change constitutions without investors approval, look at the link below relating to Wellington Capital's imminent removal…
http://www.couriermail.com.au/busin...led-for-thursday/story-e6freqmx-1226079456192
The Federal Court subsequently ruled in favour of the investors as the story below outlines
PIF Action Group lands Federal Court win
http://www.financialstandard.com.au/news/view/12072780/
This has a lot of relevance to EquitiRust Investors as it seems the irresponsible entity wants to milk the fund for quite some time. The longer this matter is prolonged the better it is for EquitiRust, whilst investors’ funds keep dwindling day by day.
The only choice for investors going forward is to kick EquitiRust out and install someone independent.
It seems others have attempted to change constitutions without investors approval, look at the link below relating to Wellington Capital's imminent removal…
http://www.couriermail.com.au/busin...led-for-thursday/story-e6freqmx-1226079456192
The Federal Court subsequently ruled in favour of the investors as the story below outlines
PIF Action Group lands Federal Court win
http://www.financialstandard.com.au/news/view/12072780/
This has a lot of relevance to EquitiRust Investors as it seems the irresponsible entity wants to milk the fund for quite some time. The longer this matter is prolonged the better it is for EquitiRust, whilst investors’ funds keep dwindling day by day.
The only choice for investors going forward is to kick EquitiRust out and install someone independent.
No Trust
JUSTICE IS COMING...
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Piper Alderman - Removal of Equititrust as Manager
For those investors who have not as yet contacted Piper Alderman I urge them to do so. The facts surrounding the issuance of subordinated units and the change to the constitution need to be investigated… A full inquiry also needs to be undertaken on the "King Con" Loans as well to determine whether directors should be sued personally for the losses.
I believe all investors will be written to by Piper Alderman soon...
For those investors who have not as yet contacted Piper Alderman I urge them to do so. The facts surrounding the issuance of subordinated units and the change to the constitution need to be investigated… A full inquiry also needs to be undertaken on the "King Con" Loans as well to determine whether directors should be sued personally for the losses.
I believe all investors will be written to by Piper Alderman soon...
No Trust
JUSTICE IS COMING...
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Memories Are Made of This! - See Any Similarities to EquitiRust...
http://www.smh.com.au/business/time-to-shut-down-city-pac-20081023-56zo.html
"... The legion of small investors stuck in City Pacific's mortgage fund should
reject the swap proposal put by management, call in an administrator, put the
thing under as quickly as possible and distribute whatever is left over.
To allow this questionable mob to trade on any longer is merely to allow
Commonwealth Bank to clean up on penalty interest rates, Phil Sullivan and
City's discredited management to rip out more lush fees, and their property
developer mates to stay on the funding drip, all while asset prices are falling.
We will explain in a tick why City Pacific has little hope of ever trading out
of its predicament. Firstly, though, it should be made clear what options are
open to beleaguered investors in the mortgage funds in respect of a wind-up.
CBA is the major secured creditor to the City Pacific First Mortgage Fund (FMF).
It gets paid out first in the event of insolvency. After the employees and the
receiver that is. Unsecured creditors, with their $900 million in savings frozen
in the fund, rank behind secured creditors.
Those who are unlucky enough to own shares in the parent company also, into
which management is trying to switch FMF unitholders, rank even further back in
the queue and would be a snowflake's chance in Hades of ever clawing back a cent
were that to go belly up - which is probable.
Investors should also be aware that although CBA is also a creditor its
interests are categorically not aligned with theirs.
Penalties
Already the bank appears to be charging penalty interest rates as City has been
technically in default. Those penalties are likely to rise, and they bite
directly into what FMF unitholders can expect to get back in a wind-up.
We are not suggesting there has been some sort of Faustian Pact struck here
between City and its bankers, merely pointing out that CBA knows it has a buffer
and will gouge as much out of this wobbling property empire as it can.
Simply, the bank is owed at least $121.5 million and a fire-sale of the assets
would throw up more than that. The figure may be 50 cents to 80 cents in the
dollar as long as the insolvency experts didn't dig in for the gouge.
However, the latest published ``average variable interest rate'' on the bank
debt is 11.16%. As this is an average, we can assume that it is now higher than
11.16% as this time last year City was not in breach and bank rates were lower.
Leap of faith
What are the fund's assets worth?
There are 880.3 million $1 units. An impairment charge of $53 million has
already been taken which gives a closing balance of $827.3 million. Strip out
CBA's debt of $121.5 million (it would be higher now, that was on September 25).
If impairment charges - and this is being charitable - are worth 6 cents per
unit and the CBA debt is worth 14 cents per unit, then there is 80 cents per
unit of value left in the fund.
We are assuming here - and this is the greatest leap of faith since the Virgin
of Lourdes - that City's property valuations can be trusted. And we are assuming
that no more impairment charges will be taken.
Reaping
To the operations: City advertises to get peoples' savings into its fund then
on-lends the money to either its own property development operations in the
parent company and elsewhere, and to property developer associates, at a higher
rate.
It makes money on the ``spread'', apart from reaping $38 million in funds
management revenue last year (at a time when the funds were frozen), it booked
$23.6 million in ``rendering of financial services''.
This spread becomes negative when you add in City Pacific's management fees of
the FMF. (If counting just the interest charged to developers and interest
technically due to be paid unitholders, the spread remains slightly positive.)
In other words, the interest which they receive from developers is less than the
11.16% interest payable on the debt in the mortgage fund - which was $13.6
million annualised. This will hit the value of the mortgage fund too.
Looking at the debt maturity breakdown in the FMF annual report, $575.8 million
was due by September 30. That was due five days later and although there is
nothing published lately you can bet City could not have got its hands on even a
decent fraction of that.
The biggest loan was $188.4 million to Martha Cove, a flash development on the
road out of Melbourne to Portsea, and a related party.
All up, some $336.7 million of loans were past due at the end of June, which
were extended by the FMF. Related party loans as of June 30 totalled $255
million.
`Past due'
Which brings us to the next point: capitalised interest. Instead of making
interest payments every month, as you would do under a normal loan arrangement,
most of the City developers don't pay interest. Rather, it is added on to the
principal of the loan to be paid back at the end of the term.
The question is, will it ever be paid back? City the parent company has been
boasted of its profits for years but when you look through them you find they
were based on revenue numbers bulked up by capitalising interest on its loans
and booking it as income.
The loans are rolled over. The interest goes on top. Some are second mortgages
with high-risk rates of 20% or more. So City is booking non-existent profits,
though technically a legal practice, by rolling over developer loans.
That is coming home to roost, and every day this fund trades on with redemptions
frozen the interest charges flow to the CBA and the capitalised interest to
developers escalates.
At June 30, loans ``past due'', or in breach, were $159.5 million and loans due
that were rolled over were $336.7 million. That's $496.2 million which would
have been past due at the balance date had the loans not been renegotiated.
Over half of the entire loan book, in other words, would have been ``past due''
had these extensions not been made.
Piquant aromas
The sad thing is that while City is burning the savings of its small investors -
now blaming the credit crunch - its executives got rich by generating
supercharged profits from capitalised interest and ripping the money out via
dividends in the head stock.
They should be forced to restate their profits like ABC Learning.
Even on the impairment charge, the principal was $33.3 million and the
capitalised interest $19.7 million. If they didn't capitalise that interest they
would not have dusted that $19.7 million which, incidentally, was dusted mostly
outside the Gold Coast.
Melbourne, it seems, is City Pacific's nemesis.
This reporter first smelt a rat upon hearing that City was flying institutional
investors down in a helicopter to visit the Martha Cove project two years ago.
Helicopters are ``tres'' Gold Coast 1980s. They throw up a piquant aroma of the
flashy entrepreneur desperate to impress.
Following the helicopter ride, City last did an equity raising in the head stock
via a placement to the likes of Perpetual, Dick Pratt's Thorney and others in
February 2007 at $4.60 a share.
They raised $80 million and it was done one week prior to the release of the
interim results. The stock got promptly slammed as a large chunk of the group's
``record'' interim profit was from asset revaluations. Without them profit would
have fallen.
The institutions saw the writing on the wall and bailed. Still, the $80 million
was in the bank and the stock was in the $3 range.
Now, the entire market cap is $25 million. This thing is gone.
Once the fund investors appoint their own administrator, CBA will go straight
over the top with its own receiver. Still, the administrator is there to keep
the receiver honest. ..."
mwest@...
http://www.smh.com.au/business/time-to-shut-down-city-pac-20081023-56zo.html
"... The legion of small investors stuck in City Pacific's mortgage fund should
reject the swap proposal put by management, call in an administrator, put the
thing under as quickly as possible and distribute whatever is left over.
To allow this questionable mob to trade on any longer is merely to allow
Commonwealth Bank to clean up on penalty interest rates, Phil Sullivan and
City's discredited management to rip out more lush fees, and their property
developer mates to stay on the funding drip, all while asset prices are falling.
We will explain in a tick why City Pacific has little hope of ever trading out
of its predicament. Firstly, though, it should be made clear what options are
open to beleaguered investors in the mortgage funds in respect of a wind-up.
CBA is the major secured creditor to the City Pacific First Mortgage Fund (FMF).
It gets paid out first in the event of insolvency. After the employees and the
receiver that is. Unsecured creditors, with their $900 million in savings frozen
in the fund, rank behind secured creditors.
Those who are unlucky enough to own shares in the parent company also, into
which management is trying to switch FMF unitholders, rank even further back in
the queue and would be a snowflake's chance in Hades of ever clawing back a cent
were that to go belly up - which is probable.
Investors should also be aware that although CBA is also a creditor its
interests are categorically not aligned with theirs.
Penalties
Already the bank appears to be charging penalty interest rates as City has been
technically in default. Those penalties are likely to rise, and they bite
directly into what FMF unitholders can expect to get back in a wind-up.
We are not suggesting there has been some sort of Faustian Pact struck here
between City and its bankers, merely pointing out that CBA knows it has a buffer
and will gouge as much out of this wobbling property empire as it can.
Simply, the bank is owed at least $121.5 million and a fire-sale of the assets
would throw up more than that. The figure may be 50 cents to 80 cents in the
dollar as long as the insolvency experts didn't dig in for the gouge.
However, the latest published ``average variable interest rate'' on the bank
debt is 11.16%. As this is an average, we can assume that it is now higher than
11.16% as this time last year City was not in breach and bank rates were lower.
Leap of faith
What are the fund's assets worth?
There are 880.3 million $1 units. An impairment charge of $53 million has
already been taken which gives a closing balance of $827.3 million. Strip out
CBA's debt of $121.5 million (it would be higher now, that was on September 25).
If impairment charges - and this is being charitable - are worth 6 cents per
unit and the CBA debt is worth 14 cents per unit, then there is 80 cents per
unit of value left in the fund.
We are assuming here - and this is the greatest leap of faith since the Virgin
of Lourdes - that City's property valuations can be trusted. And we are assuming
that no more impairment charges will be taken.
Reaping
To the operations: City advertises to get peoples' savings into its fund then
on-lends the money to either its own property development operations in the
parent company and elsewhere, and to property developer associates, at a higher
rate.
It makes money on the ``spread'', apart from reaping $38 million in funds
management revenue last year (at a time when the funds were frozen), it booked
$23.6 million in ``rendering of financial services''.
This spread becomes negative when you add in City Pacific's management fees of
the FMF. (If counting just the interest charged to developers and interest
technically due to be paid unitholders, the spread remains slightly positive.)
In other words, the interest which they receive from developers is less than the
11.16% interest payable on the debt in the mortgage fund - which was $13.6
million annualised. This will hit the value of the mortgage fund too.
Looking at the debt maturity breakdown in the FMF annual report, $575.8 million
was due by September 30. That was due five days later and although there is
nothing published lately you can bet City could not have got its hands on even a
decent fraction of that.
The biggest loan was $188.4 million to Martha Cove, a flash development on the
road out of Melbourne to Portsea, and a related party.
All up, some $336.7 million of loans were past due at the end of June, which
were extended by the FMF. Related party loans as of June 30 totalled $255
million.
`Past due'
Which brings us to the next point: capitalised interest. Instead of making
interest payments every month, as you would do under a normal loan arrangement,
most of the City developers don't pay interest. Rather, it is added on to the
principal of the loan to be paid back at the end of the term.
The question is, will it ever be paid back? City the parent company has been
boasted of its profits for years but when you look through them you find they
were based on revenue numbers bulked up by capitalising interest on its loans
and booking it as income.
The loans are rolled over. The interest goes on top. Some are second mortgages
with high-risk rates of 20% or more. So City is booking non-existent profits,
though technically a legal practice, by rolling over developer loans.
That is coming home to roost, and every day this fund trades on with redemptions
frozen the interest charges flow to the CBA and the capitalised interest to
developers escalates.
At June 30, loans ``past due'', or in breach, were $159.5 million and loans due
that were rolled over were $336.7 million. That's $496.2 million which would
have been past due at the balance date had the loans not been renegotiated.
Over half of the entire loan book, in other words, would have been ``past due''
had these extensions not been made.
Piquant aromas
The sad thing is that while City is burning the savings of its small investors -
now blaming the credit crunch - its executives got rich by generating
supercharged profits from capitalised interest and ripping the money out via
dividends in the head stock.
They should be forced to restate their profits like ABC Learning.
Even on the impairment charge, the principal was $33.3 million and the
capitalised interest $19.7 million. If they didn't capitalise that interest they
would not have dusted that $19.7 million which, incidentally, was dusted mostly
outside the Gold Coast.
Melbourne, it seems, is City Pacific's nemesis.
This reporter first smelt a rat upon hearing that City was flying institutional
investors down in a helicopter to visit the Martha Cove project two years ago.
Helicopters are ``tres'' Gold Coast 1980s. They throw up a piquant aroma of the
flashy entrepreneur desperate to impress.
Following the helicopter ride, City last did an equity raising in the head stock
via a placement to the likes of Perpetual, Dick Pratt's Thorney and others in
February 2007 at $4.60 a share.
They raised $80 million and it was done one week prior to the release of the
interim results. The stock got promptly slammed as a large chunk of the group's
``record'' interim profit was from asset revaluations. Without them profit would
have fallen.
The institutions saw the writing on the wall and bailed. Still, the $80 million
was in the bank and the stock was in the $3 range.
Now, the entire market cap is $25 million. This thing is gone.
Once the fund investors appoint their own administrator, CBA will go straight
over the top with its own receiver. Still, the administrator is there to keep
the receiver honest. ..."
mwest@...
VALUE OF $1 UNITS 78cents or is it 60cents?
there was a posting on the www.equititrust.com.au website 20-6-11 - I cant find it now. Has it been pulled down?
there was a posting on the www.equititrust.com.au website 20-6-11 - I cant find it now. Has it been pulled down?
"... EIF will record an accounting loss and a tax loss for the year ended 30 June 2011. Accordingly, as EIF has no income to distribute, the ordinary monthly payments received by investors in the period 2 July 2010 to 29 March 2011 are all partial repayments of capital and, therefore, are not income and will not need to be included in the assessable income in an investor’s tax return for the current year. ..."
Drat! nothing earned for the WHOLE year ... but you did get some of your money back .. you can add that to the $0.78c each unit is now worth (as at 30 April 2011).
But wait! there's - two more months to lose some more yet!
My guess - recovery of anywhere near $0.78 is a dream, but it's a dream many investors will cling to for fear of loss.
What a difference a year makes.
Drat! nothing earned for the WHOLE year ... but you did get some of your money back .. you can add that to the $0.78c each unit is now worth (as at 30 April 2011).
But wait! there's - two more months to lose some more yet!
My guess - recovery of anywhere near $0.78 is a dream, but it's a dream many investors will cling to for fear of loss.
What a difference a year makes.
78cents - once ! twice! sorry - 60cents max!! more like 50cents
take 78cents which is based on what some valuer has told them
now, some properties will have GST to take off - so that could be how much ???
lets say the entire portfolio got sold over the next 6 months - and that is not going to happen.... so anotehr year of rates, taxes, land tax, maintenance staff etc on larger properties - all comes out of "our money".
and then assume another 3 months to settle and mortgagee sales - lets make it a year of overheads
legal fees; compliance costs; how much is the NAB 'nabbing' each month on $24M say $300K a month ????? lets assume it takes 3 months to clear them....
I predicted 60cents in the $1 back in Feb 2011 when these culpable clowns were saying the money is safe....
I reckon that in the final wash up we will see a $100M plus loss and the units at around 50cents in the dollar......
the major loans of $70M and $42M - a total of $112M will be lucky to yield $34M total - there is 78M just there in one hit!
the other thing that is not factored into to any of these figures is that the security properties themselves have a whole raft of unpaid imposts which have to get cleared before any sales proceeds get to the Mortgagees - rates, taxes, land taxes...... we have to assume that King Con wasn't too worried about his rates being paid to date.....
let McGrath Nicholl in to Equititrust for a week and get them to sign off on the real and likley nett return....
we are all still waiting for KPMG to post some explanation re Note 4 in the 2008/2009 financial accounts.
It is my view that if my assumption is correct, there would be no entitlement to any return or fees on the sub-ordinated units for 2009, 2010 and to date - and this would see well over $40M clawed back for unit holders.
This wind up process now needs someone of experience and integrity to oversee it.....the return can be increased but it needs complete Board impartiality and some aggressive forward thinking.... something more than people scampering by horse and foot or whatever that drivel that EIF posted was all about.....
take 78cents which is based on what some valuer has told them
now, some properties will have GST to take off - so that could be how much ???
lets say the entire portfolio got sold over the next 6 months - and that is not going to happen.... so anotehr year of rates, taxes, land tax, maintenance staff etc on larger properties - all comes out of "our money".
and then assume another 3 months to settle and mortgagee sales - lets make it a year of overheads
legal fees; compliance costs; how much is the NAB 'nabbing' each month on $24M say $300K a month ????? lets assume it takes 3 months to clear them....
I predicted 60cents in the $1 back in Feb 2011 when these culpable clowns were saying the money is safe....
I reckon that in the final wash up we will see a $100M plus loss and the units at around 50cents in the dollar......
the major loans of $70M and $42M - a total of $112M will be lucky to yield $34M total - there is 78M just there in one hit!
the other thing that is not factored into to any of these figures is that the security properties themselves have a whole raft of unpaid imposts which have to get cleared before any sales proceeds get to the Mortgagees - rates, taxes, land taxes...... we have to assume that King Con wasn't too worried about his rates being paid to date.....
let McGrath Nicholl in to Equititrust for a week and get them to sign off on the real and likley nett return....
we are all still waiting for KPMG to post some explanation re Note 4 in the 2008/2009 financial accounts.
It is my view that if my assumption is correct, there would be no entitlement to any return or fees on the sub-ordinated units for 2009, 2010 and to date - and this would see well over $40M clawed back for unit holders.
This wind up process now needs someone of experience and integrity to oversee it.....the return can be increased but it needs complete Board impartiality and some aggressive forward thinking.... something more than people scampering by horse and foot or whatever that drivel that EIF posted was all about.....
50CENTS RETURN ESTIMATE.......
I would love to be wrong - we cant get detailed figures from Equititrust - so lets see how close this estimate goes:-
Fund assets per EIF $195,476,421
Discount - general estimate only -$19,547,642 10.0%
Discount - King Con and South Australian assets best guess -$30,000,000
Operating costs of major assets: Resort ??? no idea
Sales costs estimate -$9,773,821 5.0%
Rates and taxes, land tax estimate -$4,886,911 2.5%
Legals and associated sales costs estimate -$4,886,911 2.5%
National Bank EIF -$25,000,000
bank interest 3 months -$900,000
Overheads EIF , Directors, staff, lawyers say 12 months -$3,000,000
$97,481,137
Unit holders $203,634,856
Return $0.48
SORRY FOR ALL THE RED AUSSIESTOCKS FORUMS I NEEDED TO HIGHLIGHT THE MINUSES FROM THE PLUSSES.
I would love to be wrong - we cant get detailed figures from Equititrust - so lets see how close this estimate goes:-
Fund assets per EIF $195,476,421
Discount - general estimate only -$19,547,642 10.0%
Discount - King Con and South Australian assets best guess -$30,000,000
Operating costs of major assets: Resort ??? no idea
Sales costs estimate -$9,773,821 5.0%
Rates and taxes, land tax estimate -$4,886,911 2.5%
Legals and associated sales costs estimate -$4,886,911 2.5%
National Bank EIF -$25,000,000
bank interest 3 months -$900,000
Overheads EIF , Directors, staff, lawyers say 12 months -$3,000,000
$97,481,137
Unit holders $203,634,856
Return $0.48
SORRY FOR ALL THE RED AUSSIESTOCKS FORUMS I NEEDED TO HIGHLIGHT THE MINUSES FROM THE PLUSSES.
No Trust
JUSTICE IS COMING...
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Equititrust Mismanagement
If the same people are allowed to make the same bad decisions the return will definitely be in the 50% disaster zone...
There will also not be an independent assessment on the liability of the directors in regard to the “King Con” scandal…
If the same people are allowed to make the same bad decisions the return will definitely be in the 50% disaster zone...
There will also not be an independent assessment on the liability of the directors in regard to the “King Con” scandal…
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