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LM Investment Management - Lack of confidence

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Are FMIF Loans Compromised?


I think members should be very concerned about these loans.

"City Pacific's mortgage trust (CPFMF) is only allowed to take first mortgages over property, chief executive Phil Sullivan said.

The company (City Pacific Limited) sometimes follows the fund with its own money, creating a second mortgage.

"We can't end up behind a hostile lender," Mr Sullivan said." (bracketed information added)

http://www.heraldsun.com.au/busines...-at-city-pacific/story-e6frfh4f-1111114202243

That was Phil Sullivan's view back on 17 August 2007.

However, I'm of the view that such lending potentially compromises the first mortgage holder's position if the entity controlling the first mortgage is the same entity controlling the second mortgage.

And we find that LM is in a likewise position with first mortgages held by the FMIF and second mortgages held by the MPF, both entities controlled by LM.

LM disclosed in the latest FMIF RG45 (31 December 2012) that the MPF has second mortgage exposure of at least $41m on loans subordinate to first mortgages held by the FMIF. Such FMIF loans at 100% LVR and at least 90 days in arrears.

As responsible entity for the FMIF, LM has a duty to members of the FMIF to act in their best interests and should not be concerned that if the security assets held for loans which the MPF has second mortgages need to be disposed of, then those assets should be disposed of, regardless of the losses borne by the MPF.

No first mortgage holder should be concerned about the outcome for the second mortgage holder - never.

Would a change of manager change anything - no, it cannot (unless the LM FMIF fund manager was changed, and not the MPF manager)

What is the cost to the FMIF to hold onto these first mortgages?

What is the cost to the MPF if the FMIF sells the security assets?

To my mind, the first mortgage loans (after which the MPF is subordinate) are potentially compromised. It's only my opinion, but that's the way I see them.
 
Just in case you have not seen these docs,

On the LM Website - under Unit Holder Archives are two docs- LM Strategy for Fund dated 20 Dec 12, the other is titled Misinformation ........ dated 18 Dec

These make interesting reading and highlight for me the difficulties for us investors in feeder funds WFMIF etc are going to be kept informed, as clearly now that LM is no longer RE for this WFMIF, it has no real interest in telling us anything. Often information about the WFMIF is included in FMIF info OR that info re FMIF is directly relevant for us WFMIF investors

I fully realise we will have to chase Trilogy , which I am doing, but its all to easy for them to blame LM , and for LM to say its Trilogy's fault

When questioned about catch up payments for WFMIF (sorry ASICK about flogging this horse) LM replied as follows

"It is a fact that the “catch up” investor income is a liability of the wholesale fund that is included as such in the accounts of that fund and is owing to investors in that fund. Hence we clearly stated that it would be paid.

As the assets in the FMIF are sold, its liabilities and expenses can be paid and capital distributions will be made to all investors. As an investor in FMIF, the wholesale fund will receive the pro-rata equivalent amount as the FMIF and the other feeder funds. As the RE of the wholesale fund, it will be a matter for Trilogy to determine how to distribute the payment to the investors in the wholesale fund.

The first capital distribution will be made in March and we will notify the market of same.

There is a legal process that we are required to follow given the fund’s strategy and as the fund is now deemed “illiquid” . That process ensures fairness to all investors including the wholesale fund".
 

Good afternoon Rodent,

Thanks for the info. I read this letter:
http://www.lmaustralia.com/Download...response-to-wfmif-trilogy-letter-18-12-12.pdf

and in particular, I note this excerpt:
"Trilogy has absolutely no bearing on the LM First Mortgage Income Fund strategy. For Trilogy to suggest that they are monitoring the sale of assets is ridiculous. Trilogy is not managing the LM First Mortgage Income Fund assets. The reality is that all Trilogy will be doing is receiving payments and communication along with every other investor in the LM First Mortgage Income Fund." (emphasis added)

and this:
"3. Net Asset Value
Trilogy makes a statement that they are yet to independently verify the net asset value.
(i) They do not manage the underlying assets of the Fund, which are held by the LM First Mortgage Income Fund. It is misleading for Trilogy to suggest that they can undertake such review, as they are not entitled to any of the asset information that would be required in such a review."

as for the daily unit price, can you guess what that's used for? It's used to calculate Trilogy's fee on a daily basis.

Rodent, I still think you're being harsh on LM, to wit, "These make interesting reading and highlight for me the difficulties for us investors in feeder funds WFMIF etc are going to be kept informed, as clearly now that LM is no longer RE for this WFMIF, it has no real interest in telling us anything. Often information about the WFMIF is included in FMIF info OR that info re FMIF is directly relevant for us WFMIF investors."

It's got nothing to do with "no real interest in telling (you) anything", it's a fact that the WFMIF is now no more than investor in the FMIF, just as any other investor in that fund. So, LM has to communicate with Trilogy as RE for the WFMIF. It is for Trilogy then to communicate with investors in the WFMIF.

You say "that info re FMIF is directly relevant to us WFMIF investors": sadly, that is not true. The information is indirectly relevant to WFMIF investors via Trilogy (as RE) for the WFMIF. Each fund manager is responsible to communicate with unitholders, and for the FMIF, the WFMIF is the unitholder, not the members of the WFMIF.

Rodent, knock yourself out about the so-called "distributions" - in my view, everything coming back to you will be capital anyway, and if it isn't called that, that's what it is - it's coming out of the same pool of money.

The Blame Game - yes, and I posted about that a long time ago. Expect more of it.

It is for Trilogy to distribute money received into the WFMIF - to make payments to fund expenses including management fees, and set aside monies for anticipated ongoing expenses, and then maybe some to investors. LM is not at liberty to tell WFMIF members how much money is paid to the WFMIF since members of the WFMIF are not members of the FMIF.
 

Rodent69 - you can keep banging the drum as far as I am concerned. I feel pretty annoyed too that we in the WFMIF are being treated unfairly by LM in that the main fund is receiving catch up payments and we are not, especially as they received two of those payments, namely, May and June 2010, before Trilogy was ever RE.

I have contacted LM about this disparity and their last letter was a real brush off and stated that:
"the LM Wholesale First Mortgage Income Fund will be the beneficiary of liquidity at the end of the first quarter in 2013 along with all other investors throughout the closed funds. Trilogy will be advised of payments made, however it will be up to them as the new responsible entity as to how those payments will be allocated in the Wholesale First Mortgage Income Fund."

On contacting Trilogy after this, they say that they have taken up this matter or inequality of payments with ASIC. Also they state they are not aware of any lump sum payment to be made to them at the end of March 2013 but when payment is received will endeavour to pay it out as soon as possible, dependent on the level of information made available by LM.

They also state that they possess the necessary license to be RE of the WFMIF, something which I know ASICK disputes.

I fear that we are going to spend many years being bounced around between LM and Trilogy, both companies blaming the other for non payment of monies. I'd like to hope Trilogy comes good but fear the worst after hearing ASICK's many tales of woe.
 
ASICK said:
Rodent, knock yourself out about the so-called "distributions" - in my view, everything coming back to you will be capital anyway, and if it isn't called that, that's what it is - it's coming out of the same pool of money.
Click to expand...

ASICK, I am sure Rodent knows the distributions will come out of capital, but the thing is, the distributions for 2010, of which we are missing eight, were accounted for in tax assessments for 2011 and thus depending on how the fund was held, some people will be out of pocket due to tax paid on mythical distributions in that year. Also, LM have always said they will pay out distributions (even if it comes out of capital) before paying out the rest of the capital. What is probably annoying Rodent as well as myself is the inequality of the main fund being paid distributions before the wholesale fund and this indeed started before Trilogy even became RE.
 
Let the Games Begin!


Good afternoon to you too Mysteryman.

Ah, a rose by another name would smell as sweet - and that's the case with capital called "distribution". Capital is all that's left - it simply has to come from there. But, as I say, knock yourself out, there's no "blood" coming from any "stones" in the FMIF.

As to the licence, I merely point out that Trilogy has not obtained any new licence - and it was LM which stated Trilogy didn't have the requisite licence.

I suggested that the fact that if LM has not made payments to your fund, it may be that Trilogy does not possess a proper licence to run the fund (as LM alleged). Trilogy says they do - LM says they don't. I have no idea which of the cases is correct.

I suggested also that if a payment is made to your fund, that payment (if small) might be consumed by management fees (and of course, fund costs).

It's not hard to see that LM doesn't have much $$$ in the FMIF - from the latest RG45, cash on hand as at 31 October 2012 was only $3.50m (on page 6 of the RG45)

I really can't see the MPF remaining open either - I wouldn't be surprised if it shut up shop sooner rather than later.

I'll reiterate one of my woes, Trilogy only paid members of the PFMF a lousy three quarters of one cent per unit in SEVEN MONTHS.

Don't be surprised if any repayment is slow, no matter what it's called.

There's a simple reality, and that is that Trilogy is entitled (as manager of your fund) to no more information than any other investor in the FMIF, and I'd guess that's a tad painful for Trilogy.

Nevertheless, the battle lines are forming - let the games begin!
 
Related Party Loans to MPF

ASICK said:
This graphic may (or may not) be of interest to LM fund members:

http://moneymagik.com/LMFMIF_MPF_Concerns.jpg
Click to expand...

I've updated the graphic with this one excerpt:
"The Responsible Entity uses the terms “arrears” and “default” interchangeably." (on page 10 of the fund's RG45 dated 31 December 2012) - a loan in arrears is therefore a loan which is in default. Since all 27 loans are in arrears, consequently every loan is in default.

It's quite astounding to wonder how it's possible for LM to say:

"... As at 31 October 2012 the Fund has two related party loans totaling $9,272,569 granted to entities controlled by the LM Managed Performance Fund (MPF). Both loans are performing assets for the Fund at commercial rates. Combined they equate to 2.84% of the total loan portfolio."

All loans are in arrears, therefore in default. All loans have 100% LVRs, therefore maxed out with accrued interest, and/or alternatively impaired by a falling security asset value (whichever the case may be).

Are the two related party loans (above) really "performing loans"? It's your fund, what do you think?

UPDATE - I think I've figured it out - "performing" and "arrears" and "default" are each interchangeable with the others?

The 31 December 2011 fund accounts disclose only one related party loan associated with MPF, and that's to Australian International Investment Services Pty. Ltd. I've only got the 31 December 2011 accounts which disclose a loan of $7,849,504. The note applicable to the loan states:

"Peter Charles Drake is a director and guarantor of Australian International Investment Services Pty. Ltd. (AIIS). The entity is wholly owned by LM Managed Performance Fund (related party) and Peter Charles Drake is the nominated director of the Responsible Entity on behalf of the scheme. AIIS is a joint borrower in a loan facility outstanding to the scheme as at 31 December 2011 for $7,849,504 (30 June 2011: $7,849,604). This transaction was approved on an arm's-length basis and is on normal terms and conditions."

Since ALL loans are in default and arrears at 90 days (or more) with 100% LVR, I wonder why LM hadn't recovered the outstanding monies from the guarantor, Mr. Drake?

Now, what was that about "hats"?

Don't forget Trilogy:
http://moneymagik.com/info_letter_re_pacific_first_mortgage_fund.pdf
 
Back to the Future?

It's always interesting to go back to look at previous fund information:
http://112.109.66.18/~collins/uploads/LM Latest news.pdf

From page 10, "The average loan to valuation across the mortgage portfolio as at 30 June, 2010 is 86.56%. The average loan to valuation ratio of the fund has increased from sub 70% to 86.56% since the Fund closed to protect capital value and to prioritise repayment of the previous CBA line of credit facility. The unit price remains $1.00.1,3,4 It is the loan to valuation ratio that has absorbed the impacts during this time, not the unit price. The conservative loan to valuation position the Fund adopts on initial setting of its loans has insulated it from the 2008 and 2009 softening in asset valuations. In addition the loan to valuation ratio has absorbed necessary capitalisation of interest and loan realisation costs which are due to the Fund and which are accruing for collection by the Fund when the borrower repays the Fund."

Ah ... the good ol' arbitrary LVR.

"It is the loan to valuaton ratio that has absorbed the impacts during this time, not the unit price"

We all know that LVR = ( Loan ($) / Security ($) ) * 100%

So, if the fund is suffering, how is it possible to maintain unit price? Oh.. so easy - just increase the LVR.

What is the effect? The effect is that unit price is maintained, but RISK has increased - and yes, I'm sure you all know what happens next - impairments/losses, and eventually the unit price has to drop because of the downward pressure of falling security asset values. See what happened above, the LVR rose from 70% to 86.56% - that means risk has increased by slightly more than 20% - ugh! So, loans are not as likely to be recovered.

"It is the loan to valuaton ratio that has absorbed the impacts during this time, not the unit price"

Reading the excerpt, one would be foregiven if one thought that a magical thing called the loan to valuation ratio (LVR) came along and ABSORBED the impacts of the market, and that as a result of the intervention of that magical thing (LVR), unit price was maintained.

But, you'd all probably know it as simple transposition.

For example,

we lend $100m with security assets of $150m - that's an LVR of about 67%.
Let's say that there's 100m units in the fund - the unit price is $1.00
Assume the market is not good, and the security assets drop to $120m - LVR = 83%
What's happened is that the unit price is maintained, but risk has increased by 24% - that's not good and most probably is outside the LVR guidelines set out in the PDS.
another drop to $100m security would bring the LVR to 100% and that's scary.
But unit price would stay the same $100m/100m units = $1.00/unit.

It's also possible to reduce the unit price to maintain the security LVR of say, 65%.
Let's say the security asset drops from $150m to $120m.
For a 65% LVR, Loan ($) = $120m * .65 = $78m : unit price = $78m / 100m = $0.78m/unit.
A recovery of 65% of the security value of $120m is more likely and thus a unit price of $0.78/unit.

But I'm sure you'll all realise that the second method isn't too popular with MIF/MIS managers, but IMO maintenance of the LVR should be more important than maintenance of unit price - a high unit price along with high LVR is for dreamers. A low unit price with lower LVR (say 65% / 70%) is for realists.

Yes, for the LM FMIF, "It is the loan to valuaton ratio that has absorbed the impacts during this time, not the unit price", but the fund couldn't escape the reality of high LVRs, and will not do so in the future with fund LVRs now all at 100%.
 


Mysterman, Your statement of support and your understanding is correct, I have and will keep chasing Trilogy, watch for the latest reply from Trilogy to my questions. It is interesting that the replies you receive from Trilogy are slightly different to their comments to me, more re this later.

As actual investors in LM of course our views on some aspects may differ to ASICK's but I am sure you will agree with me that much of his analysis and interpretation is on the ball, however where I disagree with something I will say so, as I would expect ASICK to do also.

From my perspective LM has ALWAYS had the cash available ie estimated @ $500k per month for the missing months of our distributions that would have allowed them to be paid long ago, and this issue would not get a mention any longer!!
 
Trilogy was asked these questions, as a follow up to earlier questions

QUOTE -In discussions with LM and other investors there is clear evidence that LM has recently paid Catch Up Distributions to investors of the FMIF.

As the RE for my fund -WFMIF, which is an investor in the LMFMIF, I should be receiving a part of these distributions. Would you please recheck that Trilogy has NOT recently received these distributions, they were paid in Dec, with more to come - Refer previous Emails re details please

Based on what you say below WHEN you do receive these what is Trilogy's process for payment, do you have all the links in place so that my Platform BT./Asgard will receive these payments. Remember these are catch up Distributions that were accrued in past Fin Years.

This is the reply received today!!!

Quote -I can assure you we have not received any distributions from LM into the Wholesale Fund.

We are utterly perplexed by this and have raised the matter directly with ASIC and also LM....we are yet to receive a satisfactory answer and will be pursuing this matter with vigour.

 
Too Many Hats?


Hi Rodent,

Yes, I agree ... the aim of the forum is for the benefit of fund members.

My experiences in the PFMF is that at the beginning we knew very little about managed funds, financial reports, and RG45s. Many investors refuse to read the RG45s and financial reports - I was one of that number, but not any more, and where I'm able to, I try to give some understanding about those documents to MIF/MIS members who feel they're in the dark.

I don't expect members who understand to bother too much about my postings, but if I can help those who are confused, then that's okay for me - it's not going to bring my losses back, but I happy to help where I can.

I can see you guys are where we were years ago (2008/2009), and I understand why many members of the Equititrust and LM funds are confused.

I think if LM members took the time to go back and compare the RG45s for the past four years (especially the LVR ranges for loans), then they'd learn to predict the outcome for the period following each RG45, including the most recent one (31 December 2012). I'm also confident they'd learn to moderate unit price with risk to form a more realistic view of the fund's performance, or lack of performance (whatever the case may be).

Re: payments. I remember posting about what I thought were some inequities in relation to payments to various funds from the LMFMIF, but I really couldn't work about the mechanism - it all seemed a bit strange. I thought it might have been so that the other funds might be able to cover operating costs (management fees, auditors, and the like), but truthfully, I couldn't unravel what was happening.

I concluded that certain payments must have been made by way of agreements between various funds - but, that was only a guess.

I think that it's possible to overlook procedure when there's so many transactions between funds managed by the same manager - too many hats might not be a good idea.
 
LM FMIF LVRs OVER THE YEARS



30 April 2009: Average LVR 73.56%



30 June 2010: Average LVR 86.56%



31 May 2011: Average LVR 91.88%



31 October 2012: Average LVR 100%

This excerpt fom 30 June 2011 is interesting:
"In addition the loan to valuation ratio has absorbed necessary capitalisation of interest and loan realisation costs which are due to the Fund and which are accruing for collection by the Fund when the borrower repays the Fund."

Again, that magical LVR has "absorbed" the capitalisation of interest (loans in default, so interest is added to capital - interest is then calculated on capital + interest) and the loan realisation costs. What in fact has happened is that the likelihood of recovery has become much less because LVR had risen to 86.56%.

IMO, nothing is being "absorbed": in order to hold the same unit price, or alternatively limit any fall in unit price, LVR is simply increased (that is, RISK is increased). Average LVR in the LMFMIF has been under pressure for increased loan values due to capitalisation on the loan side, and falling asset values on the security asset side (both top and bottom putting pressure to the middle (so to speak)) - of course, it all came to an end as at 31 October 2012 when capitalisation ceased at LVR = 100%. Geez, it's possible to keep the unit price from falling by increasing beyond 100% LVR - Wouldn't that be fun - I wonder how many members would be happy to see an LVR of > 100% in the LMFMIF now?

A plump fund full of accruals which is ripe for the making of handsome fees. A frozen fund is most certainly a manager's delight.

Now every downward pressure on asset security asset values will mean impairments and/or losses. In the absence of any increase in security asset value/s, ALL costs will result in fund losses. It seems the LM FMIF is right on its limits.

It's interesting to graph each RG45 LVR (in ranges) table and then overlay the graphs. In the case of the LMFMIF, it'd most certainly show how the fund's losses were "squeezed" out through the top of the LVR table, and IMO will continue to do so.

If LVR had been maintained at, say 75%, all RG45s would have disclosed an ever-falling unit price which, IMO, would have given members an indication of the state of the LMFMIF that they would have understood.

I'm of the opinion that members don't look to LVR, they look only to unit price - and that's a BIG mistake in damaged funds such as Trilogy's PFMF and LM's FMIF.
 
The Prudent Lender

20 April 2012, "As previously advised, and in line with the loan covenants, further principal repayments on the Fund’s core finance facility have taken place. This is required to ensure the finance facility does not exceed 10% of the Fund’s gross mortgage assets and is a direct result of asset devaluations, asset sales and the slowdown in mortgage asset realisations." (emphasis added)
http://balmaintrilogy.com.au/pdf/BTI 5028 UnitholderLetter.pdf

15 November 2012, "The six-month extension of the CBA Facility, which expired on 31 August 2012, has now been formalised, enabling us to continue with our structured asset disposal program. To ensure the Facility is repaid by the new maturity date of 28 February 2013, CBA has incorporated additional covenants into the Facility, including an obligation to repay 50% of all net proceeds received by the Fund upon the disposal of assets (including sale, lease and all other asset-related proceeds.)[/B]
In line with our obligations under the terms of the Facility, a principal repayment of $11 million was made during the Reporting Period. Subsequent to the Reporting Period, aggregate principal repayments of $6.5 million were made in July and September, coupled with a $983,000 repayment in October, reducing the total amount owing to $11.52 million. These repayments are required to ensure the Facility does not exceed 10% of the Fund’s gross mortgage assets and is a direct result of continuing asset devaluations and asset sales. Further repayments will be required from time to time as we continue to adhere to the Fund’s loan covenants until such time as the Facility is discharged." (emphasis added)
http://balmaintrilogy.com.au/pdf/BTI 5125 Asset Review Letter.pdf

There's good reason to go on about LVR - any prudent lender should ensure a low LVR - after all, the lower the LVR, the more the likelihood there will be for full recovery of the loan, especially in volitile market conditions.

(although not verified), I understand that under Citypac, the CBA's LVR for the (then) CPFMF was 15% - under Trilogy it's 10% [nothing to do with Trilogy as manager]. The low LVR discloses the risk the bank sees in the fund and the degree of security it requires to protect its loan to the fund.

Compare the security the bank has over the fund viz-a-viz the security the fund has over its lenders (table "H") on page 11 : http://balmaintrilogy.com.au/pdf/BTI5130_PFMFRG45_OCT12.pdf

Not only does the CBA compel the PFMF to comply with the 10% LVR, it also take half of all inflows as a result of asset sales (and other incomes as disclosed above).

I'm sure the LMFMIF's present lender is well protected too - it's not just about interest rate, more importantly it's about security. If we assume LMFMIF's loan has an LVR covenant of 10% - then a loan of about $30m is on the edge of that covenant - I'd feel quite confident that assets sales and further impairments would force a payback of the facility regardless of how long the loan's been approved for.

And members of the LMFMIF will know when the lender barks, because until the lender is satisfied, the doors for capital outflow to investors will be closed - and IMO, that's inevitable.

It would seem to me that a banker looking at the Loans in LVR ranges tables ("H") in the PFMF and FMIF might muse, "They shouldn't be allowed to get away with that".
 
I am not an investor in any LM funds but do feel for those who are. About a week ago the GC Bulletin reported that Peter Drake was going to take a higher public profile, something he was not keen on doing but realised he must. To back this up it seems has created a social media platform including his own website, twitter, youtube etc. If you want to view it you can access all his accounts from his personal web page, peterdrake.com.au. Not sure if it will make investors feel better or worse but in case you were not aware of it, I thought I would let you know. It is early days at the moment so not much there you are not already aware of.
 
Peter Drake - The Site.


Wow, what an experience to visit www.peterdrake.com.au - stunning.

How would I rate it?

Well, not as interesting as this: http://www.youtube.com/watch?v=w4QQyLQ6kr0

I'm stunned - what would drive a guy to attach his happy pic to a spruik telling investors about his company having lost 41% of investors' money in the LM FMIF? Darn, he forgot to mention the 100% LVR on every loan, and that every loan is in default.

And the video (Mr. Bottle's spruik) -- I couldn't get past the first few minutes after the spruik that "there's been no recession in Australia" - quite unbelieveable given the state of the LM FMIF and all the other funds that have crashed - maybe, no recession, but, that's a technical term, isn't it?

His site is going to make some good reading/watching - and I'm sure it'll generate some good humour, if nothing else.
 
Re: Peter Drake - The Site.

.
Hi Asick. After reading your post I thought I would watch the whole video on peterdrake.com.au. If I was a member of one of the closed funds I don't think I would be happy. I realise it's a sales presentation but to ignore the closed funds and the recession in the property market is pretty poor especially as the information given is so positive. Having watched it, I am getting a sense of why investors in the frozen funds had become so frustrated in their dealings with LM that they sought to replace them.
 
Ned Kelly?

http://www.theage.com.au/business/c...etail-ashes-20130201-2dqi8.html#ixzz2JoXlrsUw

"There'll be a fleet of Bentleys for the boys from Bentleys. Let their creditors from MFS drive Matchbox cars.

We are looking at the document Octaviar Administration Pty Ltd, and the pallets of wads of backsheesh ripped out by the liquidators from Bentleys Queensland and their indispensable lawyers, Henry Davis York.

Lest you were wondering how a gang of accountants could possibly take $17 million in fees out of the corpse of Octaviar, nee MFS, in just two years, wonder no more.

It is because they can. There is nobody stopping them. The sky or the state of Octaviar is the limit, whatever comes first.

Back in the day, if Ned Kelly had known about this lurk, this liquidation racket, there is no way he would have gone into bushrangering.

He would have partnered with the banks, rather than robbing them. Instead of riding a horse he could have owned a stable of the finest, held through a tax-effective offshore trust structure subsidiary of his insolvency practice, Edward Kelly & Partners. Kelly was definitely in the wrong game."
 
Two Distributons to LMFMIF Members in the Past Month

http://www.moneymagik.com/gc_com_excerpt.jpg

"Now, however, as the LM First Mortgage fund assets were sold down and LM expanded its operations further, people would start to realise just how successful the company was. Mr. Drake said."

New definition of success: a unit price of $0.59 sustained only by sporting a 100% LVR on every loan with every loan in the fund in default. Now, that's success?

New synonyms for performing: default, arrears. [LMFMIF RG45 December 2012]

"First Mortgage Fund investors have been paid two distributions in the past month ..." - well, there you go, FMIF investors were paid two distributions in the past month - no dispute about it now.

"LM successfully renegotiated finance from Deutsche Bank for the fund in December (2012) ..."

Success is now defined (LMFMIF RG45 December 2012, page 2) as renegotiating a loan with the following characterstics:

Interest rate: 15%
Interest rate on default: 18%
Interest rate if default persists for more than 6 months: 20%
In 2013, Payments of at least $500,000 per month is required until the facility (December 2012: $29.4m) is drawn down to $25m.

Now, that's success? Without doubt, Deutsche Bank had success, that's for sure. [ps. What's the LVR covenant?]
 
"Oils Aint Oils"

http://www.lmaustralia.com/Downloads/FinancialReports/FMIF-financials-30-06-12.pdf



This may be of interest to members of the feeder funds.

"oils aint oils Sol"

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

"CORPORATIONS ACT 2001 - SECT 601FC - Duties of responsible entity - (1) In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must: ... (d) treat the members who hold interests of the same class equally and members who hold interests of different classes fairly; and ..."
 
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