Wellington Capital PIF/Octaviar (MFS) PIF

Re: Octaviar MFS Premium Income Fund PIF

ian1328 said:

I spoke to WC a short time ago and again it was confirmed that a 3c distribution will happen before xmas with the 1st one probably in the week of Nov. When one bears in mind that they have only had control of of the fund for 12 days thru an unnesessary delay surely a week late on their first distribution is acceptable. Misleading information on this thread about no payments caused a rush of phone calls and panic which helps no-one. Not forgetting there was a court case also about their operation.

Its about time we investors let WC get on with their job and stop negativity, other companies are falling by the wayside with no one to pick. Give WC a chance and see what happens. Very few people have the knowledge, credentials and experience of Jenny H. She deserves some respect.

I spoke also about the 50mil support facility and was told that negotiations are happening and when an agreement is reached it will be paid to investors.
As for the 147mil, whatever is agreed there will be added to the fund.

The 'member presentation ' is still going to but again there has only been 12 days of control so the give them a break.

I suggested that they put information on their website re court dates etc and they are going to look into this.

Regarding Raptis no money has been lost, it is being re paid, albeit under a different time frame.

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Did you think to ask WC when will X DIV day will be then That is the KEY date we all must know for the payment of DIVS I have tried but they refuse to tell me Dane //

Re: Octaviar MFS Premium Income Fund PIF

Premium Income Fund
Tax Statement Clarification – 27 October 2008Wellington Capital Limited has engaged KPMG as taxation advisers in relation to the Premium Income Fund.
To assist individual investors in completing their 2008 income tax returns, Wellington makes these comments in
response to requests from investors to provide further information arising from the 2008 distribution statement. The
form of the tax statement has been recommended by the Tax Office and the Investment and Financial Services
Association (IFSA) for disclosure by managed funds of tax information to resident individuals for completion of
2008 tax returns.
General information regarding the Premium Income Fund’s 2007/2008 distributions
The Premium Income Fund is a managed investment scheme and operates in a unit trust structure. The Premium
Income Fund reported a net loss for the year of $379 million. The cash distribution to unit holders was
$37.1 million and the taxable income attributable to unit holders was $42.1 million.
As Unitholders have a present entitlement to the income of the Premium Income Fund, the Fund is obliged to
distribute all its taxable income for taxation purposes. For the 2007/2008 financial year, the taxable income was in
excess of the cash distributed to Unitholders.
Reasons for taxable income calculated to be in excess of accounting income and in excess of cash
distributed
During 2007/2008, the Premium Income Fund invested in various structured investments, including but not limited
to mortgages, property trusts, direct equity, and other managed funds. As a result, the Premium Income Fund
received many different streams of income.
Each source of income has its own income tax outcomes that flow through to Unitholders, for example interest,
dividends (franked and unfranked), foreign income, capital gains / losses and other income.
During the year the Premium Income Fund made a significant number of impairment decisions on its assets. These
impairments for accounting purposes are expensed through the profit and loss statement, but are not able to be
claimed as deductions for income tax purposes, either because they are unrealised or of a capital nature.
There are a number of other timing related income tax adjustments in the fund that has resulted in a variance
between accounting and taxable income, items such as but not limited to borrowing costs, accrued expenses and
insurance have all contributed to the variance.
As a result of the limited cash distributions paid from the fund during the year, an unusual variance has occurred
whereby the taxable income has exceeded the cash distributions paid to unit holders. Unit holders will need to
report in their income tax returns the taxable distribution made to them during the year, not just the cash distributed
income.
Why don’t I have a capital gain in my distribution?
During 2007/2008, the Premium Income Fund sold a number of its non core investments. As a result of these
disposals, the Fund has retained carried forward capital losses to be utilised in future periods. Under current
legislation these capital losses are unable to be distributed to the Unitholders, but must be retained by the fund for
future offset against capital gains.

Re: Octaviar MFS Premium Income Fund PIF

Hear is thought for what its worth .This 3 cents div will take about 23 Mill out of the fund the fund will lose about 6.73% Not good at all there is no way the fund can pay double that next year thats 6 cents a year Guess you could keep paying it and just let the fund run down over time But a good manager would stop paying DIVS & try & build the fund up that would be the correct way to go Jh would agree with that i am sure //Dane ///

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:

The Premium Income Fund is a managed investment scheme and operates in a unit trust structure. The Premium
Income Fund reported a net loss for the year of $379 million. The cash distribution to unit holders was
$37.1 million and the taxable income attributable to unit holders was $42.1 million.
As Unitholders have a present entitlement to the income of the Premium Income Fund, the Fund is obliged to
distribute all its taxable income for taxation purposes.

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This is not directed at you seamisty.

So I have to pay tax (out of my salary) on income the fund made and was paid to RBOS for the money looted by Peacock/King/Hutchings.

When will this nightmare end.

And the Fed wants us to spend and invest to keep the economy going. Well it's a bit hard to spend and invest when your ATO keeps taking my income!!! What a crok.

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:

Premium Income Fund
Tax Statement Clarification – 27 October 2008Wellington Capital Limited has engaged KPMG as taxation advisers in relation to the Premium Income Fund...........

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KPMG???????? See article in Australian 14 Oct 08 by Susannah Moran
"KPMG sued for $200m by ASIC over Westpoint"; to be heard on 7/11.

Re: Octaviar MFS Premium Income Fund PIF

Jadel said:

Duped
The odds of finding anybody to buy in an off market transfer at more than 10c would be higher than finding a live Tasmanian Tiger at the moment
That is why i did not want to confuse that poor investor .

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Agreed. When it relates to open market selling. I should have used a capital IF.

But my mind is presently focussed on tax planning so I read the question from only that perspective. I'm hoping to book the capital loss but keep the up side in the family. In which case I'll already have a buyer. I just need to make a capital gain that large first.

Re: Octaviar MFS Premium Income Fund PIF

Just to advise - not only did I get interviewed by a newspaper yesterday, but this morning ABC radio Perth rang me to also tape an interview for replay at 10.45am about advice I/we could give investors of many other frozen funds.

I find these off the cuff interviews are only going to deliver what the interviewer wants - they ask the questions.

Re: Octaviar MFS Premium Income Fund PIF

Looking up the WC PIF website today is a useless act if you want any updated information on the distribution date. It doesn't add up. If there's to be a delay in the payment, why not publish an apology and explanation? Pleasant as they are, the people giving information on the hotline don't seem to have been briefed from one central command point. Reliable communication at this time is of the highest priority, so WC put a notice up on your website!

Re: Octaviar MFS Premium Income Fund PIF

breaker1 said:

Just to advise - not only did I get interviewed by a newspaper yesterday, but this morning ABC radio Perth rang me to also tape an interview for replay at 10.45am about advice I/we could give investors of many other frozen funds.

I find these off the cuff interviews are only going to deliver what the interviewer wants - they ask the questions.

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Please tell us what your advice is.

Re: Octaviar MFS Premium Income Fund PIF

To my way of thinking WC don't give a stuff about us now . They have us all locked up in the bag .We can squeal as loud as we want but it will do no good WC wont return my calls any more And there is nothing we can do /Dane //

Re: Octaviar MFS Premium Income Fund PIF

Burnt said:

Please tell us what your advice is.

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Set up a forum like this one
Start up an action group
Put out the odd media release
Get a hold of the fund register
Be preparred to sacrifice much of your spare time
Encourage the use of the talents of the members of the action group
Use the AG support base to gain respect and access of and to the fund managers
Don't worry, your health is more important than your money

....that sort of thing, but don't expect what you actually say to actually be printed.

Re: Octaviar MFS Premium Income Fund PIF

great dame said:

To my way of thinking WC don't give a stuff about us now . They have us all locked up in the bag .We can squeal as loud as we want but it will do no good WC wont return my calls any more And there is nothing we can do /Dane //

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Unit holders of the PIF own the Fund - WC work for the Fund and are answerable to Unit Holders. What professionalism they display in carrying out their role and in answering Unit Holders questions and providing them with accurate and reliable information !!! LOL

We can actually do something - COMPLAIN TO THE NSX - WC are now answerable to them also !!!! Keep squealing.

Re: Octaviar MFS Premium Income Fund PIF

breaker1 said:

Set up a forum like this one
Start up an action group
Put out the odd media release
Get a hold of the fund register
Be preparred to sacrifice much of your spare time
Encourage the use of the talents of the members of the action group
Use the AG support base to gain respect and access of and too the fund managers
Don't worry, your health is more important than your money

....that sort of thing, but don't expect what you actually say to actually be printed.

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You have done all this work and what have you achieved ?

The PIF AG has only ever supported Wellingtons schemes. You could have just done nothing and the same outcome would have been achieved.

I'm thinking that quite a few unit holders that followed your advice to vote for Wellingtons resolutions are now feeling rather stupid after reading this mornings article in The Australian. Particularly given that on top of things, the promised October cash payment (which swung a lot of votes) is not going to happen.

Good Work !!!!

Re: Octaviar MFS Premium Income Fund PIF

Burnt said:

You have done all this work and what have you achieved ?

The PIF AG has only ever supported Wellingtons schemes. You could have just done nothing and the same outcome would have been achieved.

I'm thinking that quite a few unit holders that followed your advice to vote for Wellingtons resolutions are now feeling rather stupid after reading this mornings article in The Australian. Particularly given that on top of things, the promised October cash payment (which swung a lot of votes) is not going to happen.

Good Work !!!!

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Well for one he started this thread that you come on all the time and offer nothing but criticism, so even if he only did that, he has done a darn sight more than you will ever do for unit holders.

Re: Octaviar MFS Premium Income Fund PIF

The PIF AG has only ever supported Wellingtons schemes:::::: I wasn't aware that there was ever a better alternative scheme apart from liquidation on offer Burnt.Apparently I wasn't alone on making these very clever observations. Seamisty

Re: Octaviar MFS Premium Income Fund PIF

This article by Michael West appeared in SMH last week. Although its about City Pacific, I think it makes an interesting read.


Time to shut down City Pac

by Michael West
October 23, 2008


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.

-----------------end------------------

Link: http://business.smh.com.au/business...20081023-56zo.html?page=fullpage#contentSwap2

Re: Octaviar MFS Premium Income Fund PIF

...and here's City Pacific's response to the West article:

http://www.asx.com.au/asxpdf/20081024/pdf/31d3lgdl1qg4yj.pdf

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:

The PIF AG has only ever supported Wellingtons schemes:::::: I wasn't aware that there was ever a better alternative scheme apart from liquidation on offer Burnt.Apparently I wasn't alone on making these very clever observations. Seamisty

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Alternative was to vote no, appoint an independent administrator.
See Michael West article above.

Re: Octaviar MFS Premium Income Fund PIF

Burnt said:

Alternative was to vote no, appoint an independent administrator.
See Michael West article above.

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Well it appears that the majority of unit holders did NOT think that this was the better alternative and clearly demonstrated that in their voting, giving WC an overwhelming vote of confidence.

Re: Octaviar MFS Premium Income Fund PIF

Burnt said:

Alternative was to vote no, appoint an independent administrator.
See Michael West article above.

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That choice was as popular as a 'pork chop in a synagogue', hence we are with WC. Move on. Seamisty