LM Investment Management - Lack of confidence

[ASICK]

"Rather than quoting press releases from LM verbatim, I'd suggest you think about it critically instead of buying into the LM spin."

You suggest what you need to suggest - but, for what it's worth, I try, to the best of my ability to think critically about every issue I put my mind to. I most certainly do not buy into anybody's spin. You might note that one of the quotes comes from FTI consulting.

Perhaps what's been said isn't to your liking, but it's no more than one should expect to be reasonably said in the circumstances. I'm sure that ASIC would have LMIM under a microscope at the moment, and if the company wasn't able to carry out its duties are RE of the various funds, then I'm sure ASIC would be the first to let us know.

"Again, if everything is hunky dory, why would you call in an administrator? How many healthy businesses do you know have all of a sudden decided to call in an administrator? You only call it in if there is a question of solvency."

Well, LM stated (in part), "Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

I can't anything being avoided about the reasoning for the calling of the administrator. I mean, where's the suggestion everything is "hunky dory"?

"Directors become personally liable and criminally liable for insolvent trading. Any inkling of such, they've got to call in an administrator. The implications can be extreme."

Yes, of course.

"You'd have to also wonder what the debt covenant on Deutsche's facility says now that the RE is under administration."

The fund, not LM, provides security for the Deutsche facility, and LM is in the capable hands of an experienced administrator. Perhaps there's no problem at all. To date, none has been disclosed.

"As for the role of the voluntary administrator, of course LM will say as such. Here is what the role of an administrator actually is
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Voluntary_administration_guide_for_creditors.pdf/$file/Voluntary_administration_guide_for_creditors.pdf"

Thanks.

"Clearly the role of the administrator is to act in the interests of the creditors."

Yes.

"It's no different for administration of any other company."

ah! but it is, the administrator is also caught up with Corporations Act s. 601FC, in particular subsection (1)(c):
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

In relation to $$$, and your suggestion that debts may now fall due, the income stream from the LMFMIF alone was $9,103,864 (Management Fees) and $4,817,414 (receiver fees) - I couldn't imagine any creditor wanting to see the end of the continuous flow of "gold" into LMIM.

LM also mentioned the LMFMIF itself, and I'm not surprised, 100% LVR for every loan, each loan being 90 days (or more) in default.

Doubtlessly, there are problems to work out, but with the $$$s coming in from the fund (providing it remains RE), it seems to me that LM is bound to get creditor support.

"Also, I don't quite understand your assertion that there are effectively 2 LMs. How can there be 2 LMs, if LM has only 1 effective shareholder?"

I'm surprised, but I'll have to live with that.

 

[bigheadache]

I can't anything being avoided about the reasoning for the calling of the administrator. I mean, where's the suggestion everything is "hunky dory"?

You made the insinuation that everything was going great when you said

LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream.

I'm just suggesting that clearly things are so sweet.

The fund, not LM, provides security for the Deutsche facility, and LM is in the capable hands of an experienced administrator. Perhaps there's no problem at all. To date, none has been disclosed.

LM is the RE and is responsible for managing the fund. it's not uncommon for business loans to fall due immediately in the case of default of a separate loan or administration/receivership of the company, even if payments are up to date. I'm only asking the question as I wouldn't have the foggiest what the debt covenant of the deutsche facility is like, but it wouldn't be a surprise if one of the covenants is that the loan falls due immediately should the RE go under liquidation/receivership/administration.

ah! but it is, the administrator is also caught up with Corporations Act s. 601FC, in particular subsection (1)(c):
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

I've already covered this. Administrators are not long term REs. They are usually accountants, not investment people. They will either fix up LM and hand back RE duty to LM or if they can't fix it, move to appoint a new RE. They won't be managing the funds themselves for any meaningful time. Actually, if the experience of timbercorp and Great Southern is anything to go by, someone else will call a meeting to replace the RE if this administration runs for too long.

In relation to $$$, and your suggestion that debts may now fall due, the income stream from the LMFMIF alone was $9,103,864 (Management Fees) and $4,817,414 (receiver fees) - I couldn't imagine any creditor wanting to see the end of the continuous flow of "gold" into LMIM.

LM also mentioned the LMFMIF itself, and I'm not surprised, 100% LVR for every loan, each loan being 90 days (or more) in default.

Doubtlessly, there are problems to work out, but with the $$$s coming in from the fund (providing it remains RE), it seems to me that LM is bound to get creditor support.

It's pretty normal for debts to fall due immediately if you go under liquidation/administration. Who knows if the creditors will support.. that's for the administrators to work out.

 

[ASICK]

"You made the insinuation that everything was going great when you said:
Originally Posted by ASICK
LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream."

Actually, I was comparing LM and EL. Both statements are true. I make no reference to its potential difficulties which are disclosed here: http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

Those facts need to be taken in context before drawing broader conclusions.

"I've already covered this. Administrators are not long term REs. They are usually accountants, not investment people. They will either fix up LM and hand back RE duty to LM or if they can't fix it, move to appoint a new RE. They won't be managing the funds themselves for any meaningful time. Actually, if the experience of timbercorp and Great Southern is anything to go by, someone else will call a meeting to replace the RE if this administration runs for too long."

Well, with respect, you said it was like any other company in administration, and it is clearly not like any other company in administration. The administrators have to comply with 601FC(1)(c) in addition to its concern for creditors (and the company itself).

I agree, (as I've posted previously on this thread), in absence of run for the fund's management, the administrators will either "make" or "break" LM - whichever outcome will depend on just how investors (especially the platforms) perceive the administrators' performance.

"It's pretty normal for debts to fall due immediately if you go under liquidation/administration. Who knows if the creditors will support.. that's for the administrators to work out."

Of course it is, but there's a lot of cash flow into LMIM, and LMIM had already discloses that it has the NTA required to maintain its licence (read in context with LM's recent media release).

My reference to the "two" LMs was made about the perception of LM (the company) as being "Peter Drake's LM" - MW's articles such as the "Scarlet Pimpernel" ridiculed Drake and by implication, LM. I think there was a need to separate the "two", that is, separate Peter Drake from LM in order to leave an LM in the game which was serious about the outcome for investors.

In short, I think there was a need to put an entity in control of the fund which would (1) satisfy creditors, and (2) satisfy investors, especially since only Trilogy's come courting investors.

 

[bigheadache]

"You made the insinuation that everything was going great when you said:
Originally Posted by ASICK
LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream."

Actually, I was comparing LM and EL. Both statements are true. I make no reference to its potential difficulties which are disclosed here: http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

I guess you're relying on that statement about having sufficient NTA to support their AFSL. The "NTA" to support an AFSL can be a bank guarantee so unless you actually know what assets are pledged its hard to draw a conclusion that they have plenty of cash just because they have an AFSL. LM is also a private company so its not like they'll give you a balance sheet. I can only surmise that things must be bad if they have called in the administrator.

Well, with respect, you said it was like any other company in administration, and it is clearly not like any other company in administration. The administrators have to comply with 601FC(1)(c) in addition to its concern for creditors (and the company itself).

The practical reality is that administrators are not investment managers. If they were to honestly act in the interest of unitholders, they would immediately seek to appoint a good manager (I'm guessing by your posts not trilogy!) and RE who has a clue.

Of course it is, but there's a lot of cash flow into LMIM, and LMIM had already discloses that it has the NTA required to maintain its licence (read in context with LM's recent media release).

I've discussed above about the NTA.

My reference to the "two" LMs was made about the perception of LM (the company) as being "Peter Drake's LM" - MW's articles such as the "Scarlet Pimpernel" ridiculed Drake and by implication, LM. I think there was a need to separate the "two", that is, separate Peter Drake from LM in order to leave an LM in the game which was serious about the outcome for investors.

I kind of see the point you are attempting to make. You want to change management control. However, this is a sole proprietor business. You can't separate the owner from his business.... unless you want to make Mr Drake an offer. It's not like a normal company where you can get a board to sack a CEO.

In short, I think there was a need to put an entity in control of the fund which would (1) satisfy creditors, and (2) satisfy investors, especially since only Trilogy's come courting investors.

Understandable. However an administrator is not a long term solution. If you look at Timbercorp and Great Southern, investors moved to replace the administrator with an RE that has a clue. The problem in this example I guess is finding someone acceptable.

 

[ASICK]

Administrators

Bigheadache, for the record, are you an investor in an LM fund? and do you have an interest in either of Trilogy or LM?

You say, "I guess you're relying on that statement about having sufficient NTA to support their AFSL. The "NTA" to support an AFSL can be a bank guarantee so unless you actually know what assets are pledged its hard to draw a conclusion that they have plenty of cash just because they have an AFSL. LM is also a private company so its not like they'll give you a balance sheet. I can only surmise that things must be bad if they have called in the administrator."

I think you're grasping at straws. You want to present an argument, but you seem to be failing. I'm sorry that you can't accept that the licence NTA condition has been met, but that's simply a reality.

Have you ever tried to get a bank guarantee? Do you have any idea of the amount of assets you'd need to encumber to secure, say, $1m?

Why do you speak in riddles? You say, "LM is a private company" - so what? You seem to have a lot of experience about loans, then why speak about LM being a private company. You know as well as I do that it doesn't matter a hoot: it's cash or assets supporting a guarantee that matter, and if it was a bank guarantee then we wouldn't be looking at an LVR as high as 60% for such a guarantee, would we? Banks are a lot more prudent that managers of funds like LM and the like.

And there you go again, "I can only surmise that things are bad if they called in the administrator" - and here I go again, " Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

You say, "The practical reality is that administrators are not investment managers. If they were to honestly act in the interest of unitholders, they would immediately seek to appoint a good manager (I'm guessing by your posts not trilogy!) and RE who has a clue."

Personally, I think that if the administrator does a good job, then (in my view) that'd be the best that's possible. I don't believe there's a "white knight" out there. I'm sure No Trust (as an Equititrust investor) would agree that the receiver of Equititrust's fund (BDO) is a far better option than any manager.

Unless a prospective manager has a track record of success, then the fund is better off with an administrated manager or receiver rather than a manager with a poor track record (yes, such as Trilogy). After, the fund is being wound up - investment manager? Like Balmain Trilogy for example?
http://www.moneymagik.com/yardy_yardy_yah.php

Experience tells me that damaged funds are really better off being run by real estate agents, not fund managers: To my mind, an administrator or receiver is much closer to an estate agent than a fund manager is.

You say, "I kind of see the point you are attempting to make. You want to change management control. However, this is a sole proprietor business. You can't separate the owner from his business.... unless you want to make Mr Drake an offer. It's not like a normal company where you can get a board to sack a CEO."

But the appointment of an administrator has done just that. Yes, Drake is there, and yes, he's the owner, but he most certainly doesn't have control. In this case, ownership does not equal control. And it might be that administration might be extended to ensure a sound windup of the funds - I think that's what LM investors should hope for (subject to the administrators' performance).

You say, "Understandable. However an administrator is not a long term solution. If you look at Timbercorp and Great Southern, investors moved to replace the administrator with an RE that has a clue. The problem in this example I guess is finding someone acceptable."

Yes, and that being difficult, a receiver or administrated manager is a grand option. These funds have the capacity to tarnish managers so I'd be suprised if any manager with a good reputation would want to touch it with a ten-foot pole.

 

[bigheadache]

Re: Administrators

Bigheadache, for the record, are you an investor in an LM fund? and do you have an interest in either of Trilogy or LM?

None of the above. I'm not old enough to put money in a mortgage fund.

You say, "I guess you're relying on that statement about having sufficient NTA to support their AFSL. The "NTA" to support an AFSL can be a bank guarantee so unless you actually know what assets are pledged its hard to draw a conclusion that they have plenty of cash just because they have an AFSL. LM is also a private company so its not like they'll give you a balance sheet. I can only surmise that things must be bad if they have called in the administrator."

I think you're grasping at straws. You want to present an argument, but you seem to be failing. I'm sorry that you can't accept that the licence NTA condition has been met, but that's simply a reality.

Have you ever tried to get a bank guarantee? Do you have any idea of the amount of assets you'd need to encumber to secure, say, $1m?

I have actually. Although back when I did it in the 90s, from memory you only needed $50k for an AFSL so that's all we arranged for. Now its like $5m. And I'm not sure what's so hard to believe. You're the one saying that they must have heaps of $$$ since they fulfil their NTA requirements. I'm just here to point out the completely obvious, which is they can't be going great if they are under administration and fulfilling NTA isn't a good measuring stick. Heck I'm sure timbercorp and great southern met their AFSL NTA requirements when they went into administration.

Why do you speak in riddles? You say, "LM is a private company" - so what? You seem to have a lot of experience about loans, then why speak about LM being a private company. You know as well as I do that it doesn't matter a hoot: it's cash or assets supporting a guarantee that matter, and if it was a bank guarantee then we wouldn't be looking at an LVR as high as 60% for such a guarantee, would we? Banks are a lot more prudent that managers of funds like LM and the like.

You're asserting they have heaps of cash because they somehow fulfil their NTA requirements (which from experience might only be a bank guarantee). All I'm saying is that its hard to know if you can't get regular financial reports as they are a private company. I think they only have to file once a year instead of having quarterly/6 monthly reporting like a normal listed company.

You're also just relying on an LM press release. What do you think they are going to say? You really think they're going to turn around and say "guess what folks - we're broke". Read between the lines. Directors don't appoint administrators to look after unitholders. They appoint them because solvency and going concern is at issue.

And there you go again, "I can only surmise that things are bad if they called in the administrator" - and here I go again, " Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

My point exactly. Things must be going bad if they call in an administrator.

You say, "The practical reality is that administrators are not investment managers. If they were to honestly act in the interest of unitholders, they would immediately seek to appoint a good manager (I'm guessing by your posts not trilogy!) and RE who has a clue."

Personally, I think that if the administrator does a good job, then (in my view) that'd be the best that's possible. I don't believe there's a "white knight" out there. I'm sure No Trust (as an Equititrust investor) would agree that the receiver of Equititrust's fund (BDO) is a far better option than any manager.

Unless a prospective manager has a track record of success, then the fund is better off with an administrated manager or receiver rather than a manager with a poor track record (yes, such as Trilogy). After, the fund is being wound up - investment manager? Like Balmain Trilogy for example?
http://www.moneymagik.com/yardy_yardy_yah.php

Experience tells me that damaged funds are really better off being run by real estate agents, not fund managers: To my mind, an administrator or receiver is much closer to an estate agent than a fund manager is.

What qualifications does an administrator have to run a fund? they're accountants. Have they ever managed a fund? Have any property experience? And why would a real estate agent be better? They only want to sell the asset and earn a commission. You're assuming that disposal of assets is the only solution. That could be correct, but its a broad assumption you are making. What happens if the best strategy is to just rent property out? What if the best deal is actually to try and sell the entire mortgage book? (for example the Banksia book is currently for sale). A real estate agent is probably not going to know that.

Maybe some administrators have skills in running a mortgage fund (as opposed to simply winding one up). As a group, I'd say they probably don't. And as I said, in the case of failed MIS managers like great Southern and Timbercorp, investors have moved to replace the administrator in recognition that are not good long term REs.

You say, "I kind of see the point you are attempting to make. You want to change management control. However, this is a sole proprietor business. You can't separate the owner from his business.... unless you want to make Mr Drake an offer. It's not like a normal company where you can get a board to sack a CEO."

But the appointment of an administrator has done just that. Yes, Drake is there, and yes, he's the owner, but he most certainly doesn't have control. In this case, ownership does not equal control. And it might be that administration might be extended to ensure a sound windup of the funds - I think that's what LM investors should hope for (subject to the administrators' performance).

I think you misunderstand the role of the administrator again. As I've said several times, the administrator is called in because solvency is at issue. He's not there to appease the unitholders.

Let me give you a dilemma.

If the choices are
A) wind up the fund - best interest of the unitholders but bad for creditors and end of LM as a going concern.
B) Keep carrying on as per usual for the fund - good for creditors as keeps the mgt fees coming (they might need to restructure debt) and good for LM as a going concern, but no better or worse for unitholders (they're still frozen).

What do you think the administrator is going to choose? I'm no administrator but I'm thinking B sounds more likely than A.

Yes, and that being difficult, a receiver or administrated manager is a grand option. These funds have the capacity to tarnish managers so I'd be suprised if any manager with a good reputation would want to touch it with a ten-foot pole.

Unfortunately you are probably right. I can tell you there are mortgage books transacting at the moment. As I mentioned, for example the Banksia book is for sale. Read the AFR, every so often someone is selling a mortgage trust or book. There must be people in the industry who are good at managing mortgage funds and buying this stuff at the right price. Unfortunately getting one of them to want to be the RE seems a challenge.

 

[ASICK]

Re: Administrators

Good morning Bigheadache,

You say, "None of the above. I'm not old enough to put money in a mortgage fund.".

Many would say, from the lessons learnt from early 2008 onwards, that one is never old enough to put money in a mortgage fund.

You say, "I have actually. Although back when I did it in the 90s, from memory you only needed $50k for an AFSL so that's all we arranged for."

Methinks you're getting NTA mixed up with a fee for the licence itself:
The Fee: http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed investment schemes
http://www.flyingsolo.com.au/forums/starting-business/10388-obtaining-afsl.html

You say, "Now its like $5m. And I'm not sure what's so hard to believe. You're the one saying that they must have heaps of $$$ since they fulfil their NTA requirements. I'm just here to point out the completely obvious, which is they can't be going great if they are under administration and fulfilling NTA isn't a good measuring stick. Heck I'm sure timbercorp and great southern met their AFSL NTA requirements when they went into administration."

It's probably the case that neither manager of great southern and timbercorp were required to meet the new NTA requirements. As I understand it, those funds collapsed prior to the new NTA capital requirements:

NTA: http://www.asic.gov.au/asic/asic.ns...rements+for+responsible+entities?openDocument
"To meet the new net tangible asset (NTA) capital requirements, REs must hold the greater of:
$150,000
0.5% of the average value of scheme property (capped at $5 million), or
10% of the average RE revenue (uncapped)."
I guess that'd mean that the NTA requirements of managing the LM funds would be well over $1.5m.

"You're asserting they have heaps of cash because they somehow fulfil their NTA requirements (which from experience might only be a bank guarantee). All I'm saying is that its hard to know if you can't get regular financial reports as they are a private company. I think they only have to file once a year instead of having quarterly/6 monthly reporting like a normal listed company."

Geez, "only a bank guarantee"? ONLY? Oh boy!! The NTA is regulated by ASIC. ASIC will ensure that LMIML antes up with the NTA, there's no need for punters to worry about such high falutin concepts. Some managers are private companies, others are public. It's really nothing to do with anything, and you know it.

NTA cannot be ulitized to pay accounts, otherwise, there's no NTA. Make sense?

you say, "You're also just relying on an LM press release. What do you think they are going to say? You really think they're going to turn around and say "guess what folks - we're broke". Read between the lines. Directors don't appoint administrators to look after unitholders. They appoint them because solvency and going concern is at issue."

Ok, I'll read between the lines: "It was a beautiful day so I decided to take my boat and do some fishing" - are you surpised I didn't pick up the same story line as you did? I guess everyone to their own on that one. Reading between the lines can be anything one wants it to be - what ever suits one's agenda.

and off you go again, "My point exactly. Things must be going bad if they call in an administrator.", and here I go again, "Events over the past couple of weeks, however, have meant that the Company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment."
http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"your point"? it was LM's! You're merely restating the obvious.

You say, "What qualifications does an administrator have to run a fund? they're accountants. Have they ever managed a fund?"

What experience does it require to hold an AFSL to manage a managed investment scheme? To be a lawyer? an accountant?
http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed investment schemes

You say, "Have any property experience?"
Is that even necessary for the holding of a licence?
http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed investment schemes

You say, "And why would a real estate agent be better?"

Because the LMFMIF is being sold down - it's all about the best return for investors: knowledge of the property market is essential.

You say, "They only want to sell the asset and earn a commission."
Please - put my comment in context - I was speaking about a real estate agent running the fund, and as such would entitled to remuneration as manager.

You say, "You're assuming that disposal of assets is the only solution. That could be correct, but its a broad assumption you are making. What happens if the best strategy is to just rent property out? What if the best deal is actually to try and sell the entire mortgage book? (for example the Banksia book is currently for sale)."

Hahaha, oh dear!
http://www.moneymagik.com/yardy_yardy_yah.php
http://www.moneymagik.com/general_information.php

An example of a fund manager (Trilogy with Balmain Trilogy) holding onto assets only to see losses in asset values of FIFTY SIX PERCENT, returning only EIGHT & THREE QUARTER CENTS PER UNIT to investors and earning near TWENTY MILLION for themselves !!!

Who would have thought it possible on a fee of just 1.5%? (plus .12% fund expenses fee)

You say, "A real estate agent is probably not going to know that."

With respect, I suspect a real estate entity would know as well as, if not better, than a mere fund manager. You speak to a RE agent making a commission, well, there's one hell of an incentive for managers to hold onto value within the fund (FUM - funds under management) in order to make management fees. There's no incentive for any manager to wind down a fund - and I applaud LM for at last seeing the good sense to wind down its funds - good sense that the administrator will hopefully follow.

You say, "Maybe some administrators have skills in running a mortgage fund (as opposed to simply winding one up)."

Investors want the funds wound up - they want their money back. To my mind, an administrator is much more suited to the task than the manager who is conflicted with prolonging fees.

You say, "As a group, I'd say they probably don't. And as I said, in the case of failed MIS managers like great Southern and Timbercorp, investors have moved to replace the administrator in recognition that are not good long term REs."

and the return to the groups has been? I suspect SFA. You speak about replacement of administrators but you don't offer proof of benefits, and in any event, managers are not all the same. Some are much more capable than others. Investors always look to a change of managers when the $$$s dry up, but change doesn't always bring results: City pacific lost 52% of the PFMF, change to Trilogy, Trilogy lost 56% of the remainder.

You say, "I think you misunderstand the role of the administrator again. As I've said several times, the administrator is called in because solvency is at issue. He's not there to appease the unitholders."

I'm afraid to say that it is YOU who misses the point. The administrator of LMIML (as RE for LM funds) MUST comply with s. 601FC(1)(c) of the Corporation Act, that is, "to act in the best interests of investors".
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601fc.html

You say, "Let me give you a dilemma.

If the choices are
A) wind up the fund - best interest of the unitholders but bad for creditors and end of LM as a going concern.
B) Keep carrying on as per usual for the fund - good for creditors as keeps the mgt fees coming (they might need to restructure debt) and good for LM as a going concern, but no better or worse for unitholders (they're still frozen)."

Let me give you some results after holding on for three years: Trilogy in the PFMF, 56% of value lost over THREE years, SIXTEEN MILLION IN FEES (to 30 June 2012), and $0.08/unit repaid to investors. As time passes, investors losses have also compounded by loss of interest income.

The clear winners: The Bank, The Manager, The Lawyers, The Receivers.

The clear losers: Investors in the PFMF.

You say, "What do you think the administrator is going to choose? I'm no administrator but I'm thinking B sounds more likely than A."

Well, I'd agree with part of you A, that is, the administrators will proceed along with the wind up of the fund. As I get the feel for it, that's what investors want too. However, that's not going to be done overnight, so there's a future income stream which should please creditors.

You say, "Unfortunately you are probably right. I can tell you there are mortgage books transacting at the moment. As I mentioned, for example the Banksia book is for sale. Read the AFR, every so often someone is selling a mortgage trust or book. There must be people in the industry who are good at managing mortgage funds and buying this stuff at the right price. Unfortunately getting one of them to want to be the RE seems a challenge."

"selling the book", now that'd be a fire sale, right? Knocking off all the assets in one hit, that's gotta be the mother of all fire sales.

In my view, in the circumstances, investors in LMs funds are lucky they're getting an administrator overseeing LM - I'm sure there are many in Trilogy's PFMF (Pacific First Mortgage Fund) who wish that'd happen to Trilogy.

Still, in the end, what will be, will be.

 

[Mysteryman]

This has all been very interesting, then amusing and now monotonous. Please could you both agree to differ and move on. Thank you.

 

[ASICK]

This has all been very interesting, then amusing and now monotonous. Please could you both agree to differ and move on. Thank you.

Why don't you care to comment? (at least on the interesting and amusing parts)

If others post, then perhaps it would broaden the subject matter.

 

[ASICK]

LM's document has been taken off line, here's a link to google's cache:
http://webcache.googleusercontent.c...s/documents/inv-LM-announcement-20-03-13.aspx

Here's the text (from the cache) in case readers don't have access to an original document, a .pdf version, or a .pdf version isn't posted in the future:

"20 March 2013Dear Investor,The information contained within this letter is all that is currently available and able to be provided by LMInvestment Management Ltd (LMIM). All queries for additional information should be directed to yourfinancial intermediary. Further information will be forthcoming, and we will send it to you as soon as itbecomes available.AnnouncementThe Board of LM Investment Management Ltd (Administrator Appointed) (LMIM, the company)advises that after full consideration of its obligations as a company and its duties to ensure it acts inthe best interests of investors in the LM Funds, it is placing the Responsible Entity, LMIM, intovoluntary administration. This is not liquidation or receivership, and neither LMIM nor any of the Funds is in liquidation orreceivership. Events over the past couple of weeks, however, have meant that the Company and the funds are inimminent jeopardy of being unable to meet creditor obligations, and hence the appointment. Voluntary Administration is as a proactive approach by the Board to officially bring in independentfinancial advice across the company and the Funds. This step is believed to be in the best interests ofprotecting the Funds and maximising returns for investors, and prevent LMIM company cash flowissues going forward. Voluntary Administration has no effect on the structure of the Funds. The VoluntaryAdministrator assumes the responsibility for the decision making in the Responsible Entity role,however the funds will continue to be managed in accordance with their governing documents and theapplicable Corporations Act and Trustee Law. The Voluntary Administrators will be working withsenior LM investment personnel to optimise investor outcomes. In addition, the VoluntaryAdministrator must comply fully with its own requirements under the Corporations Act, in itsadministration role. All licence conditions of the Responsible Entity have been and continue to bemet, and there has been no breach in this regard. The financial requirements (Net Tangible Assets)of the Responsible Entity licence remain in order. The Funds are unit trusts, the assets of which areseparate and segregated from those of LMIM.The process Within the next couple of days you will receive a separate communication from the VoluntaryAdministrator. It will provide more detail around the process of the Voluntary Administration. Theultimate aim of the Voluntary Administrator is to manage and resolve a solution over a period of time,yet to be worked out and about which you will receive communication.
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Why make this appointment?Whilst the creditor issues rest with LMIM and are quarantined from the Funds, the Funds need to beshielded from any ensuing reputational damage. The Board considers that the appointment of aspecialist bringing with it, as it does, expertise and independence will afford the best protection for theFunds in this regard.What to expect over the next couple of weeksThere is an enormous amount of work to be undertaken this week to ensure the optimal results fromthis appointment for all the investors in all of the LM Funds. Many of you will have questions andthose questions will be answered. Please bear with us though, as our response may not be asprompt as usual, due to the expected initial high volume of queries. The Board is earnest in this appointment as the best means of providing arms-length, commercialityand financial analysis to the solutionsFurther information will be provided, as stated above and below. All LM Funds are now closed pending a full independent analysis by the Voluntary AdministratorRegular Fund updates will continue to be provided via the LM website, www.LMaustralia.com.LM Australian Structured Product FundIt will be business as usual for this fund with no financial impact expected as a result of the VoluntaryAdministrator. LM and the Voluntary Administrator will communicate directly with Deutsche Bank, theholder and underwriter of the notes in each of the closed end products within the Fund. Communication to investors and advisors as required will continue. Any income distributions and thematurity dates of each of the offers within the Fund continue uninterrupted. A full report will beprovided to you following the Voluntary Administrator’s analysis.LM First Mortgage Income Fund, LM Currency Protected Australian Income Fund and LMInstitutional Currency Protected Australian Income FundWe do not expect any change for investors in these Funds. The manager will continue with theorderly sale of all assets for eventual wind up of the Fund. Regular periodic capital distributions forinvestors have commenced, and will continue. Regular communication will continue. The appointment of the Voluntary Administrator brings with it independent, arms-length, specialistfinancial expertise.LM Australian Income Fund We expect this Fund will continue to be managed as it has been, according to its main documents.The Voluntary Administrator is conducting a full analysis in conjunction with senior investmentpersonnel from LM and on its completion a report will be provided for you.LM Managed Performance FundWe expect this Fund will continue to be managed as it has been, according to its main documents. The Voluntary Administrator is conducting a full analysis in conjunction with senior investmentpersonnel from LM, and on its completion a report will be provided for you.
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The appointment of the Voluntary Administrator brings with it independent, arms-length, specialistfinancial expertise. LM Cash Performance FundWe expect this Fund will continue to be managed as it has been, according to its main documents. The Voluntary Administrator will release a report on the Fund as soon as possible.In ConclusionThis decision has been well considered in consultation with independent specialist accounting andsolvency practitioners and with independent legal counsel. LMIM cannot run a risk of being unable topay its creditors, and this is the process being established to work out the issues. LM is acting tomaximise outcomes for all investors. Yours sincerely,The DirectorsLM Investment Management LtdThe LM products are solely for distribution via financial advisers and intermediaries. LM requests investors consult afinancial adviser and read and consider the relevant disclosure document before making any decisions on theirinvestment. The LM Funds are not bank deposits. Investors may lose some or all of their investment. Thiscommunication is general information on the LM funds issued by LM Investment Management Ltd (AdministratorAppointed)."

 

[k.smith]

First meeting is on the 02 April 2013

https://insolvencynotices.asic.gov....77208461/b485da8d-6097-4e25-82de-028bfc27de92

 

[mapc]

http://www.smh.com.au/business/allstar-cast-likely-to-include-the-fat-lady-20130322-2glba.html

I guess Michael West believes he is helping people with his articles, but for me they are very personal and as the receivers are now appointed I feel he could be further harming LM investors and they are sufferring enough. Maybe its time for a truce on both sides. Peter if by chance you are reading this and you haven't already, drop your lawsuit, you have enough on your plate.

 

[ASICK]

MW - Just Another Spruiker

http://www.smh.com.au/business/allstar-cast-likely-to-include-the-fat-lady-20130322-2glba.html

I guess Michael West believes he is helping people with his articles, but for me they are very personal and as the receivers are now appointed I feel he could be further harming LM investors and they are sufferring enough. Maybe its time for a truce on both sides. Peter if by chance you are reading this and you haven't already, drop your lawsuit, you have enough on your plate.

I agree Mapc, on all points. Is MW deluded? I know he's biased, but is he deluded about helping people? He acts this way for members of the PFMF. He told a PFMF investor (who kept a contemporaneous note) that he won't say anything negative about Trilogy because that would aid Phil Sullivan (ex-CEO director) - helpful fellow (to Trilogy) that MW.

The PFMF member asked MW why he wouldn't print anything about these things:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

The audio is really worth listening to, maybe I'll disclose it one day - the abrupt tone of MW's response was quite surprising. As far as I'm (now) concerned, he's a jerk. Every article he goes on and on about the defamation claim against Fairfax - and he's peeved about Sullivan's claim for defamation against Fairfax too. MW is becoming passe, he just don't know it yet. These defamation claims by Sullivan and Drake seem to have sent MW into a biased bs spin. What a shame.

For example, "However, anybody who signed up for a bit of dirt in the Maddison Estate may be interested to know Maddison is part of Peter Drake's $3 billion mortgage fund empire, which fell into the warm embrace of insolvency practitioners this week."

Now, what would it matter for anyone "who signed up for a bit of dirt in the Maddison Estate" to know what it was part of? Is MW trying to force the value of Maddison down, and thereby affect the return to investors?

Sometimes MW isn't the "sharpest tool in the toolbox", "... now they confront the haunting spectre of management by some of the hardest fee-chargers in the insolvency racket. FTI Consulting is the old Korda Mentha Queensland." - FTI charges the company, NOT the fund. It seems MW won't let the facts get in the way in order to rile investors against LM.

"Unless investors can appoint an alternative manager to the LM suite of mortgage funds quick smart, it may be a case of ''out of the frying pan, and into the fire''." - maybe he's referring to Trilogy, the entity MW won't say a word against in case it helps Phil Sullivan (ex-CEO of Citypac) - good ol' biased MW.

Drake's gone, but MW can't let go - what a shame for everyone, but MW (himself).

 

[ASICK]

Fairfax

http://pbxmastragics.com/2012/12/29/the-waters-are-lapping-at-the-feet-of-fairfax/comment-page-6/

There's a lot to be said about Fairfax - here's an example.

It woeful to see biased reporting but, it's even worse when you hear a reporter admit that he's biased.

MW is biased - perhaps an apt name for a new column for MW, "Cyclops Reports"?

 

[mapc]

Re: MW - Just Another Spruiker

I agree Mapc, on all points. Is MW deluded? I know he's biased, but is he deluded about helping people? He acts this way for members of the PFMF. He told a PFMF investor (who kept a contemporaneous note) that he won't say anything negative about Trilogy because that would aid Phil Sullivan (ex-CEO director) - helpful fellow (to Trilogy) that MW.

The PFMF member asked MW why he wouldn't print anything about these things:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

The audio is really worth listening to, maybe I'll disclose it one day - the abrupt tone of MW's response was quite surprising. As far as I'm (now) concerned, he's a jerk. Every article he goes on and on about the defamation claim against Fairfax - and he's peeved about Sullivan's claim for defamation against Fairfax too. MW is becoming passe, he just don't know it yet. These defamation claims by Sullivan and Drake seem to have sent MW into a biased bs spin. What a shame.

For example, "However, anybody who signed up for a bit of dirt in the Maddison Estate may be interested to know Maddison is part of Peter Drake's $3 billion mortgage fund empire, which fell into the warm embrace of insolvency practitioners this week."

Now, what would it matter for anyone "who signed up for a bit of dirt in the Maddison Estate" to know what it was part of? Is MW trying to force the value of Maddison down, and thereby affect the return to investors?

Sometimes MW isn't the "sharpest tool in the toolbox", "... now they confront the haunting spectre of management by some of the hardest fee-chargers in the insolvency racket. FTI Consulting is the old Korda Mentha Queensland." - FTI charges the company, NOT the fund. It seems MW won't let the facts get in the way in order to rile investors against LM.

"Unless investors can appoint an alternative manager to the LM suite of mortgage funds quick smart, it may be a case of ''out of the frying pan, and into the fire''." - maybe he's referring to Trilogy, the entity MW won't say a word against in case it helps Phil Sullivan (ex-CEO of Citypac) - good ol' biased MW.

Drake's gone, but MW can't let go - what a shame for everyone, but MW (himself).

Thanks for your comment Asick. I feel one of the appeals to the general reader of Michael West's articles is that regardless of whatever bias he may have, he is an entertaining writer and he uses those "get your attention images". So I am sure his articles are read by many, but there are real people involved and I hope he decides to consider the impact on them in any future reporting.

 

[No Trust]

I think Michael West is an excellent journalist, who has every right to voice an opinion. Everyone may not agree but that's what's called Free Speech...

For example, "However, anybody who signed up for a bit of dirt in the Maddison Estate may be interested to know Maddison is part of Peter Drake's $3 billion mortgage fund empire, which fell into the warm embrace of insolvency practitioners this week."

Now, what would it matter for anyone "who signed up for a bit of dirt in the Maddison Estate" to know what it was part of? Is MW trying to force the value of Maddison down, and thereby affect the return to investors?
Posted by ASICK

I think it is very relevant to any person putting down a deposit to know what the development is part of and who is behind it, that's just common sense and not in any way trying to force the value down, its a fact which needs to be reported...

Drake made his choices and he chose to take Michael West on, what did he expect a joyride ?? McIvor from Equititrust also chose a very acrimonious path with the media and this website, look at what he got... If the business was sound and there were no issues the media and all of us posting on this website would have nothing to attack them on... West may not be perfect, none of us are, but he has done a stellar job in exposing the Gold Coast mortgage cowboys...

 

[ASICK]

Good morning No Trust.

You say, "I think Michael West is an excellent journalist, who has every right to voice an opinion. Everyone may not agree but that's what's called Free Speech..."

I think you're a little skewed with your thinking there No Trust, my main complaint against MW relates to his lack of fair and balanced reporting when it comes to Trilogy Funds Management Limited. The issue broadly relates to "media bias".

Here's a little bit on the exactly what media bias is:
http://en.wikipedia.org/wiki/Media_bias

"The term "media bias" implies a pervasive or widespread bias contravening the standards of journalism, rather than the perspective of an individual journalist or article."

"Practical limitations to media neutrality include the inability of journalists to report all available stories and facts, and the requirement that selected facts be linked into a coherent narrative" - this is true, but it's a very different story when the facts are known and not reported on - that's not a practical limitation, that's bias.

You say, "I think it is very relevant to any person putting down a deposit to know what the development is part of and who is behind it, that's just common sense and not in any way trying to force the value down, its a fact which needs to be reported..."

Yes, but there comes along with that the responsibility of recognising the affect on others, for example investors in certain LM funds. It doesn't matter to me, but I can see that it just might affect LM investors, and as Mapc (an LM investor) has noted, it might very well affect him.

You say, "Drade his choices and he chose to take Michael West on, what did he expect a joyride ?? McIvor from Equititrust also chose a very acrimonious path with the media and this website, look at what he got... If the business was sound and there were no issues the media and all of us posting on this website would have nothing to attack them on... West may not be perfect, none of us are, but he has done a stellar job in exposing the Gold Coast mortgage cowboys..."

Actually, quite a spiel No Trust, but it was Drake himself who posted the video on his own website - so it wasn't as if one could say Drake was "exposed", one might say Drake "exposed himself" (so to speak) -and yes, I don't disagree that MW has put pressure on the likes of Citypac and LM, but I doubt whether one can say that he "exposed" them, he reported investor disquite where he saw a story - and so he should, that's the business he's in. But he won't disclose facts if those facts support someone he's in dispute with: that's called BIAS.

In all of your posting, you don't even mention media bias, not one word. You're not the slightest bit bothered that MW is not willing to disclose negative facts about Trilogy while (1) attacking LM assets (Maddison), (2) ridiculing Drake (Scarlet Pimpernel), and (3) making facual errors (about FTI fees).

To date with Michael West, when it comes to Trilogy, there has been no neutrality, there's been nothing but bias - to date, MW has not been neutral - he's a jerk.

He knows the PFMF has failed miserably under Trilogy despite all the promises:
http://www.moneymagik.com/yardy_yardy_yardy.php

He know the PFMF litigation has been a crock:
http://www.moneymagik.com/litigation.php

He knows of Trilogy's failures:
http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

and he won't report anything negative about Trilogy because he doesn't want Sullivan to be advantaged (and thereby disadvantage Trilogy). He's not only not neutral, he's purposefully biased. So, when it comes to any run by Triogy for an LM fund, MW plays gatekeeper in order to misinform investors in order to influence the outcome.

Now, to my mind, that's a tad worse than media bias.

 

[Garpal Gumnut]

I have found Michael West to be an accurate journalist.

I would agree with him that LM investors, and investors in any part of that conglomeration have been rooted, and will be lucky to see much if any of their money returned.

The comments recently from damaged investors are typical of any in the past deceived by mortgage funds, myself included, and shooting the messenger is a pointless exercise.

Your money as we discuss this topic is being electronically transferred between many accounts, far from reach, in any proceedings, years down the track.

gg

 

[ASICK]

I have found Michael West to be an accurate journalist.

I would agree with him that LM investors, and investors in any part of that conglomeration have been rooted, and will be lucky to see much if any of their money returned.

The comments recently from damaged investors are typical of any in the past deceived by mortgage funds, myself included, and shooting the messenger is a pointless exercise.

Your money as we discuss this topic is being electronically transferred between many accounts, far from reach, in any proceedings, years down the track.

gg

Well, then you'd agree with MW that fees charged to LM by FTI impact on LM investors - which they don't. If you take the time to read the posts, apart from bias, that was the only fact disputed.

No one disputes that investors are likely to recover very little - I, among others (eg. No Trust), posted that both here and on the Equititrust thread. That's not the issue either.

Well, the money's gone somewhere, no dispute about that either.

This is not about "shooting the messenger", it's about bias - when the media (in this case MW) is knowingly not neutral. [and in relation to Maddison, for the media not to damage its value]

MW told a PFMF investor, (quotes from a contemporaneous record),

The PFMF member asked MW why he hasn't written an negative article about Trilogy:

MW, "See, Phil Sullivan's suing us too, so I'm not going to go and do an article that is going to enhance his interests" - that is, MW is not going to disclose negative aspects of Trilogy because MW doesn't want Sullivan (ex-CEO Citypac, ex-manager of the PFMF) to take advantage. So MW will not include negative aspects of Trilogy's past and present management of funds - therefore LM investors are being told a lop-sided story about the battle between LM and Trilogy. MW won't disclose anything negative against Trilogy to LM investors because that would give Sullivan an advantage in the PFMF.

I'm for disclosure against both sides - not just one.

MW, "I'm hardly going to bag his (Phil Sullivan's) opponents (Trilogy) for him while he's suing us" - no, he'll just bag some of Trilogy's opponents (eg. Sullivan and Drake).

MW, "It's not a matter of being unbiased. I'm not going to put the boot into Trilogy when he's (Sullivan) suing us and Trilogy. It's not a matter of being biased, it's just reality."

My post principally relates to MEDIA BIAS.

 

[No Trust]

I agree with Garpal Gumnut Michael West is an accurate journalist and his comments about Maddison Estate are fully justified in terms of reporting the facts... Maddison is part of LM and the "Public" need to know who is behind it...

Well, then you'd agree with MW that fees charged to LM by FTI impact on LM investors - which they don't. If you take the time to read the posts, apart from bias, that was the only fact disputed.

No one disputes that investors are likely to recover very little - I, among others (eg. No Trust), posted that both here and on the Equititrust thread. That's not the issue either.

Well, the money's gone somewhere, no dispute about that either.

This is not about "shooting the messenger", it's about bias - when the media (in this case MW) is knowingly not neutral. [and in relation to Maddison, for the media not to damage its value]

MW told a PFMF investor, (quotes from a contemporaneous record),

The PFMF member asked MW why he hasn't written an negative article about Trilogy:

MW, "See, Phil Sullivan's suing us too, so I'm not going to go and do an article that is going to enhance his interests" - that is, MW is not going to disclose negative aspects of Trilogy because MW doesn't want Sullivan (ex-CEO Citypac, ex-manager of the PFMF) to take advantage. So MW will not include negative aspects of Trilogy's past and present management of funds - therefore LM investors are being told a lop-sided story about the battle between LM and Trilogy. MW won't disclose anything negative against Trilogy to LM investors because that would give Sullivan an advantage in the PFMF.

I'm for disclosure against both sides - not just one.

MW, "I'm hardly going to bag his (Phil Sullivan's) opponents (Trilogy) for him while he's suing us" - no, he'll just bag some of Trilogy's opponents (eg. Sullivan and Drake).

MW, "It's not a matter of being unbiased. I'm not going to put the boot into Trilogy when he's (Sullivan) suing us and Trilogy. It's not a matter of being biased, it's just reality."

My post principally relates to MEDIA BIAS.