Wellington Capital PIF/Octaviar (MFS) PIF

Re: Octaviar MFS Premium Income Fund PIF

If it wasnt so sad for all the investors it would be funny.

You cannot possibly tell me that they did not have an inclination at least a couple of weeks ago that this was going to happen.

I would even be prepared to go out on a limb and suggest that they would've known (or should have known) many months ago.

This economic problem has not just appeared. It has been around for a while now. Using the governments announcement as an excuse (which they appear to be doing) is even more wrong.

The fact of the matter is they should not have made promises that they knew they could not keep.

There are many many many many people out there who voted "yes" based solely on the promise that they would be receiving regular distributions. That is why they invested in the fund and that is what they wanted to happen again. They needed that money for medication. For food. For general living costs.

I would be prepared to say that the proposed distribution was the enticement that got the vote over the line. Even though the yes vote was easily over the line. WC knew distributions were what the investors most wanted and they catered to that beautifully.

There hopes were built up and now they have been crushed.

So much for the statement last week that the fund was now well positioned, because essentially they were the first to experience the problems and now they were ready to move forward. Please!!!!!!!!!!!!

People can defend WC all they like. But the fact remains that they have let this rumour and innuendo simmer for about a week now. They knew the writing was on the wall. Yet they still built up peoples hope by maintaining the line that they would be paying.

In a way I feel for those who have earned the respect of this board for the information that they provide. Posting information which others rely on. Relaying messages from WC. And now, ending up with egg on your face.

One thing that has amazed me has been the lack of trades. I first thought there would have been a rush. I was wrong. I then thought people wre hanging on to get the distribution and then they would sell. I think that might have been what was going to happen. But now what? With no distributions in sight one can only wonder what will happen next.

Either way I feel for the investors.

Re: Octaviar MFS Premium Income Fund PIF

mgr2118 said:

Can't understand that, less than 2 weeks ago, at the Shareholders Meeting, the Oct distributions were still promised.

Also, during the last week, many who have rung the WC hotline have been promised that the Oct distributions WILL BE PAID.

Surely, any professional organisation would have an understanding of their cashflow and expenses, and these would have been the basis of the assurances offered the shareholders during the Shareholders meeting and telephone responses to WC hotline callers.

One might think it very convenient that this last minute removal of distributions is now blamed on the current financial marketplace. We should remember:-

* whereas other funds have recently had their redemptions frozen, the PIF redemptions facility has been completely removed;
* WC have been managing assets for 5 months, so there should be no surprises

If we were shareholders in a public listed company (we are NSX listed) then I would think that we should have some recourse on the professionalism of the Management Team.

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Good comment.
Either Wellington has been lying repeatedly for the last two weeks by promising cash payments in October, OR they are far too incompetent to be managing the Fund if they have been taken by surprise in the last day or so.

I would like to see a list of assets realised since 30th June. This would be more helpful. Also why does the Sylvania mortgage show a realisable value at 2 May as $19.682mil when the balance outstanding as at 31 May was shown as $34.365mil ?

Re: Octaviar MFS Premium Income Fund PIF

Burnt said:

Good comment.
Either Wellington has been lying repeatedly for the last two weeks by promising cash payments in October, OR they are far too incompetent to be managing the Fund if they have been taken by surprise in the last day or so.

I would like to see a list of assets realised since 30th June. This would be more helpful. Also why does the Sylvania mortgage show a realisable value at 2 May as $19.682mil when the balance outstanding as at 31 May was shown as $34.365mil ?

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The asset realisation table is a waste of space. There should be a column that shows book value so we can track losses.

Re: Octaviar MFS Premium Income Fund PIF

This is now a horrendous situation. We can keep repeating that statement, but it doesn't help investors. Really, somebody who understands all the intricacies is required to help us fast. For instance, the government is nosing around PIF-type investment schemes and is even considering arms' length ways of providing liquidity (I could be wrong, but that's how I heard it.) The contradictory information recently coming out of WC regarding the distributions makes me fearful for the future. The MFS newsletters were a lesson in how to read between the lines. And I didn't feel comfortable with what I read today. Perhaps Dora who understands the technical aspects very well might have some ideas. We can hardly be expected to endure many more months of depressing broken promises. The NSX listing has hardly worked out. Can you ever unlist? Just a wild thought because the grand plan is clearly failing.

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:

…The distibutions were to be paid from 3 planned settlements that ALL fell through due to being unable to secure any refinancing from ANY institution. WC is continuing to work with these people but can do nothing until finance is secured. The banks are not even lending. Devastating news for all concerned. Seamisty

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Non bank lending stopped months ago. Any person with business experience who has gone through a financing knows that the process is:
- loan application
- loan assessment and provision of further information including costs
- valuation
- indicative letter of offer
- formal letter of offer
- provision of information required in letter of offer
- loan documentation
- settlement

This process takes months not days. Therefore to have expected settlement to allow the payment of the distribution the loans should have been at loan documentation stage at least two weeks ago.

Any manager worth their salt would have been tracking the borrowers process and requiring copies of documents at each stage to ensure progress has been made.

There is simply no way that WC were not aware on the 15th of October that there will be no funds available for the distribution. To have seen settlements occurring the borrower would have needed formal letters of offer at least a month ago.

WC told ComputerShare there was a Record Date of 17th Oct 2008 for a 3 cent payment on the 31st Oct 2008. The fact that the NSX were not notified shows WC's intentions.

Re: Octaviar MFS Premium Income Fund PIF

DoraNBoots said:

Non bank lending stopped months ago. Any person with business experience who has gone through a financing knows that the process is:
- loan application
- loan assessment and provision of further information including costs
- valuation
- indicative letter of offer
- formal letter of offer
- provision of information required in letter of offer
- loan documentation
- settlement

This process takes months not days. Therefore to have expected settlement to allow the payment of the distribution the loans should have been at loan documentation stage at least two weeks ago.

Any manager worth their salt would have been tracking the borrowers process and requiring copies of documents at each stage to ensure progress has been made.

There is simply no way that WC were not aware on the 15th of October that there will be no funds available for the distribution. To have seen settlements occurring the borrower would have needed formal letters of offer at least a month ago.

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Hi Dora,

I couldn't agree with you more.

One can only conclude that:-

1. WC are completely incompetent to perform as RE; and/or
2. WC were aware of the problem but chose to withhold these details over the past 2-4 weeks.

I cannot comprehend how any professional RE can offer these MFS-like excuses at this late stage.

Re: Octaviar MFS Premium Income Fund PIF

DoraNBoots said:

Non bank lending stopped months ago. Any person with business experience who has gone through a financing knows that the process is:
- loan application
- loan assessment and provision of further information including costs
- valuation
- indicative letter of offer
- formal letter of offer
- provision of information required in letter of offer
- loan documentation
- settlement

This process takes months not days. Therefore to have expected settlement to allow the payment of the distribution the loans should have been at loan documentation stage at least two weeks ago.

Any manager worth their salt would have been tracking the borrowers process and requiring copies of documents at each stage to ensure progress has been made.

There is simply no way that WC were not aware on the 15th of October that there will be no funds available for the distribution. To have seen settlements occurring the borrower would have needed formal letters of offer at least a month ago.

WC told ComputerShare there was a Record Date of 17th Oct 2008 for a 3 cent payment on the 31st Oct 2008. The fact that the NSX were not notified shows WC's intentions.

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well well well
finally I can say good bye to all my money...
WC JH what a load of #@$% they told us...
promises promises...mmmm
very very depressed.....

Re: Octaviar MFS Premium Income Fund PIF

It's surprising how little traffic there is on this thread tonight considering the bad news now facing investors. Thousands are probably still believing that they'll have extra money to spare on 31st October. MGR2118 - can only agree with you. But what could be a solution to this fiasco? We can't remain in these quicksands forever. We need Ms Hutson to provide a plan with timelines. But would we now have any confidence in them? I haven't forgotten 14 cents 45 cents and 65 cents and watching the WC DVDs.

The global financial crisis was also used by MFS as an excuse. There's been been plenty of forewarning since at least December of last year about the present challenges.

Re: Octaviar MFS Premium Income Fund PIF

Whilst this inability by the RE to pay the Oct distribution is devastating, it just goes to show that going down the liquidation / orderly realisation would have been a totally wrong decision.

It seems that your understanding of property settlements is of great use to the unitholders Dora. Will you be confronting JH about why it was not revealed to us earlier on that the Oct 31 payment was going to be a problem.

Things must be REALLY bad out there, as I am sure that nothing would have pleased WC more than to pay the first 1.5c payment, just for the PR component alone, and promoting confidence among the unit holders in JH and her company.

I am gobsmacked like most here. I just spoke to Seamisty and is devastated, she really believed as we all did that there would be stability. Things must be dire out there and no one can access money. We might end up with a stack load of real estate that we may have to hang on to till things get better, so this may mean no distributions for a while, this sucks!!

Does anyone know if WC will not getting their payment is limited to us getting the 3c total payment, or is it a case of once we get it then they will continue getting paid even if we never see another cent after the 3c for years to come??

Re: Octaviar MFS Premium Income Fund PIF

Many thanks Dora for all your hard work and research - much appreciated.

It is a pity more people did not take note of your informed posts.

Now that all our rights have been voted away I can not understand everyones surprise at being let down.

Get use to it!

Read the NSX disclosure from WC firmly stating there will be no distributions after December '08 for the forseeable future and certainly no redemptions. This is what the majority voted for.

PS. J.H was not legally able to place the Fund in liquidation without unitholders approval. This of course was not mentioned in the Information Memorandum forwarded to voters.

G.H.

Re: Octaviar MFS Premium Income Fund PIF

danger danger said:

…
It seems that your understanding of property settlements is of great use to the unitholders Dora. Will you be confronting JH about why it was not revealed to us earlier on that the Oct 31 payment was going to be a problem.
…

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No I won’t be confronting JH. I’ve tried to get answers from WC and continually get given incorrect information. I am yet to decide if they are just inexperienced (which they are) or deliberately misleading. I’ll leave contact with WC up to people like yourself who have a good relationship with them.

danger danger said:

…
I am gobsmacked like most here. I just spoke to Seamisty and is devastated, she really believed as we all did that there would be stability. Things must be dire out there and no one can access money. We might end up with a stack load of real estate that we may have to hang on to till things get better, so this may mean no distributions for a while, this sucks!!
…

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We didn’t all believe there would be stability. ALL spreadsheets and figures that were crunched by PIF unit holders show the PIF is not doing well and that the projections by WC were unrealistic. That’s why people like myself were called ‘negative’.

danger danger said:

…
Does anyone know if WC will not getting their payment is limited to us getting the 3c total payment, or is it a case of once we get it then they will continue getting paid even if we never see another cent after the 3c for years to come??

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WC told the judge and have put in writing that they will not take a management fee before unit holders get a 3 cent per unit payment. There is no time frame for this. But once the 3 cents if paid management fees will continue regardless of any further payments to unit holders. What I wonder is if WC will backpay their fees once they pay us our 3 cents.

Re: Octaviar MFS Premium Income Fund PIF

danger danger said:

Whilst this inability by the RE to pay the Oct distribution is devastating, it just goes to show that going down the liquidation / orderly realisation would have been a totally wrong decision.

It seems that your understanding of property settlements is of great use to the unitholders Dora. Will you be confronting JH about why it was not revealed to us earlier on that the Oct 31 payment was going to be a problem.

Things must be REALLY bad out there, as I am sure that nothing would have pleased WC more than to pay the first 1.5c payment, just for the PR component alone, and promoting confidence among the unit holders in JH and her company.

I am gobsmacked like most here. I just spoke to Seamisty and is devastated, she really believed as we all did that there would be stability. Things must be dire out there and no one can access money. We might end up with a stack load of real estate that we may have to hang on to till things get better, so this may mean no distributions for a while, this sucks!!

Does anyone know if WC will not getting their payment is limited to us getting the 3c total payment, or is it a case of once we get it then they will continue getting paid even if we never see another cent after the 3c for years to come??

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Yes thanks again Dora - at least there is someone supplying us with accurate information. I'm sure that NSX will be confronting WC as to why disclosure of non-payment of the promised Oct distribution was not made earlier. Perhaps it was NSX that forced them to do it today ?

What has happened today does nothing to prove that an orderly realisation would not have been the best option !

I know of people who are currently being able to access money quite easily - maybe it depends on who those people are - but then we'll never know (or will we).

And yes, once a distribution is paid (if ever), WC will receive ongoing fees, which by the way are based on a 45c/unit valuation, while we get nothing.

This was the best alternative remember !

Re: Octaviar MFS Premium Income Fund PIF

Dexter said:

Many thanks Dora for all your hard work and research - much appreciated.

It is a pity more people did not take note of your informed posts.

Now that all our rights have been voted away I can not understand everyones surprise at being let down.

Get use to it!

Read the NSX disclosure from WC firmly stating there will be no distributions after December '08 for the forseeable future and certainly no redemptions. This is what the majority voted for.

PS. J.H was not legally able to place the Fund in liquidation without unitholders approval. This of course was not mentioned in the Information Memorandum forwarded to voters.

G.H.

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Well stated Dexter.

PS. Even though it was not mentioned in the memorandum issued to investors, it was mentioned many times on here that JH could not liquidate the Fund. Maybe you need to wear a red leather jacket and spend hundreds of thousands of dollars on stage shows and glossy mail outs to be more convincing than the Corporations Act (no red leather or bright lights there).

Re: Octaviar MFS Premium Income Fund PIF

At least the Comm. Government starting to think of assisting non bank funds, but it appears only if they are "bank quality"!

We need to be approaching WC to make sure they are lobying the treasurer for assistance for funds like ours.

"TREASURY officials are working on options to extend the Government's bank guarantee to some cash management funds under which the funds would open their books to prove that their assets are bank quality.

Regulators then would assess whether the bank deposit guarantee should apply to the funds, The Australian reports.

The plan could provide an acceptable compromise to Kevin Rudd's reluctance to extend the $1.2 trillion bank deposit guarantee to market-linked investments and offer greater security for cash management trust investors.

The Australian understands the Government is also considering boosting liquidity in the secondary market for debt that has dried up in recent weeks, via another top-up of investments in wholesale paper through The Australian Office of Financial Management.

The AOFM has already signalled an $8 billion investment in residential mortgaged backed securities (RMBS), but a further extension is likely to be far less, around the $1 billion mark.

The new investment would involve providing security or purchasing corporate debt that would not normally be marketed to retail investors. The AOFM would then own the loan.

Fund managers, the Government and regulators are continuing talks in Canberra today to find a way to unlock the $25 billion of frozen investment funds, including property trusts, that is threatening the retirement savings of about 60,000 Australians.

Finance Minister Lindsay Tanner today flagged further measures to help free up frozen funds to investors facing hardship and predicted the pension bill would also rise as up to 500,000 more retirees seek part pensions.

“There are powers that are available potentially to deal with these kind of circumstances, but it is a very complex situation and it is very important to ensure that if any further initiatives are taken, they are done in a very considered way,” Mr Tanner told ABC radio.

“But there are a number of factors bearing down on the sector that are having an effect, in particular the international circumstances generally, the fall in share markets, the squeeze in credit markets and the influence of the bank guarantee as well.

“So we are continuing to work with the key regulators to improve the situation.”

Former Commonwealth Bank chief David Murray, who chairs the Government's $63 billion superannuation Future Fund, also said today more thought should have been put into the original bank deposit policy.

“There was clearly a concern to announce the guarantee quickly, (but) there could have been more thought given to how it was done,” Mr Murray told ABC radio.

“What the Government and banks should do, with the support of the Reserve Bank, is to get in and find a way of providing some liquidity into these funds by buying their securities at market price.”

Read more on this story at The Australian.

Find the powers Lindsay!!

Re: Octaviar MFS Premium Income Fund PIF

The federal government will give investment funds the opportunity to be covered by its bank deposit guarantee scheme, as long as they agree to increased regulation.To be eligible, entities will have to meet Australia's prudential regulatory requirements:::KEVIN RUDD told managers of frozen mortgage funds last night that they would have to behave like banks and undergo the same levels of scrutiny if they wanted the Government's guarantee on deposits.

The Prime Minister issued the challenge as he announced financial regulators would be given an extra $83 million to help them speed up applications by mortgage funds wishing to be reclassified.:::::: Wellington Capital is classed as a 'boutique merchant bank', what would it take for the PIF to meet the proposed criteria? If it was eligible, what would the advantages to unit holders be? Also from a media article:::::Becoming an authorised deposit-taking institution requires funds and others to meet new strict requirements from the prudential regulator, including holding a certain amount of capital in reserve to back their loans.

Finding the capital would be difficult in the current tight financial conditions, and fulfilling the regulatory requirements could take months or years.::::::Seamisty

Re: Octaviar MFS Premium Income Fund PIF

wallyt99 said:

AYyyyyy.....


What is backing the deposit guarantee? Future debt obligations? Hyper inflation?


We NEED to seperate our banks, from these organisations, otherwise we will face massive inflationary pressure, as their losses are spread over us all. Why should we pay for the speculative greed of others?!!!!!

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This was from the MORE TAXPAYERS - MONEY USED BADLY thread.

The bigger picture is more important here. Consequences of this action would be catastrophic. I am now getting worried about our federal government.

The reality is WC is forcing people to use NSX - why would she pay your 3c when for no effort she can force you, if you are desperate to sell on NSX.

Re: Octaviar MFS Premium Income Fund PIF

All the true believer fools who all got sucked in & voted yes I wonder if you would vote yes now You yes voters all thought i was wrong But believe me it dose not give me pleasure in saying now you were all warned I think our DORA could do a better job running the fund standing on her head Eyre's closed & her hands tired behind her back //Dane ///

Re: Octaviar MFS Premium Income Fund PIF

great dame said:

All the true believer fools who all got sucked in & voted yes I wonder if you would vote yes now You yes voters all thought i was wrong But believe me it dose not give me pleasure in saying now you were all warned I think our DORA could do a better job running the fund standing on her head Eyre's closed & her hands tired behind her back //Dane ///

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dame, there is no need to call people fools. It would be appreciated if you wouldn't do it again

Re: Octaviar MFS Premium Income Fund PIF

:microwave ! ! !

Re: Octaviar MFS Premium Income Fund PIF

communique said:

This was from the MORE TAXPAYERS - MONEY USED BADLY thread.

The bigger picture is more important here. Consequences of this action would be catastrophic. I am now getting worried about our federal government.

The reality is WC is forcing people to use NSX - why would she pay your 3c when for no effort she can force you, if you are desperate to sell on NSX.

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This from Business Spectator : http://www.businessspectator.com.au/bs.nsf/Article/Rationalising-mortgage-funds-KSQWW?OpenDocument

Mortgage fund makeover

The liquidity crisis in the unlisted mortgage trust sector is likely to expose the weaknesses in the operating practices of some funds and accelerate industry rationalisation.

Mortgage funds involved in property development and construction are likely to come under closer scrutiny. Funds with related party transactions could also be vulnerable to further withdrawals. Funds borrowing to pay redemptions or those capitalising interest payments may also be put under the microscope.

Disclosure of these and other key bits of information about mortgage funds will be forced into the open when the Australian Securities and Investments Commission's new regulatory guide for mortgage schemes comes into force on November 30.

ASIC issued its regulatory guide last month. It covers issues relating to liquidity, scheme borrowing, portfolio diversification, related party transactions, valuation policies, lending principles, distribution practices and withdrawal arrangements.

It is clear from reading the guide that ASIC has been worried for some time about the way in which mortgage funds have advertised the availability of withdrawals within a few days despite the illiquid nature of the fund assets.

Funds will now be forced to remind investors that schemes may allow up to one year to satisfy withdrawal requests, that it may take a relatively long time to realise mortgage loans and that the strength of the market for mortgage loans is likely to vary according to economic circumstances.

There are about 80 unlisted mortgage funds in Australia according to Property Investment Research. The smaller funds will likely be rationalised as investors learn more about how the funds are structured and what they invest in.

ASIC's efforts to force more disclosure by the mortgage trust sector follows the near collapse earlier this year of the MFS Prime Income Fund, which froze withdrawals and distributions in January. Unit-holders later discovered that their fund was loaded up with high-risk construction projects and marginal property developments, many of which resulted from related party transactions.

The $770 million fund suffered a $367 million decline in the assessed fair value of its assets in the year to June 2008. The fund, which is now managed by Wellington Capital and is listed on the National Stock Exchange, is suing Octavier, formerly MFS, for $147.5 million. As well, the fund itself was sued on Friday by Bond Street Custodians claiming $16.5 million in relation to a redemption request lodged in January.

The Premium Income Fund debacle probably contributed to the increase in redemptions in the mortgage trust sector. Redemptions have been rising all year but the rate of withdrawals rose significantly following the government guarantee on bank deposits.

However, the Premium Income Fund also showed how to provide unit-holders with liquidity – list on the stock exchange.

Meanwhile, the response of the various unlisted mortgage and income funds to the upsurge in withdrawals has raised questions about the equitable treatment of unit-holders.

For example, Perpetual responded to the surge in withdrawals by suspending all applications and redemptions for its Monthly Income and Mortgage funds. These funds have assets of $2 billion.

Perpetual took the view that it would not be fair and equitable to allow new applications at a time when withdrawals had been changed to a quarterly basis.

Meanwhile AXA Asia Pacific Holdings said it would continue to accept new applications for its $2 billion Australian Monthly Income Fund at the same time as it deferred redemptions from the fund for a period of six months.

In a further sign of the industry's disjointed response to the crisis, Bendigo Bank said it would continue offering redemptions and withdrawals for its $2 billion Sandhurst Select Mortgage Fund.

The bank will provide liquidity to meet any spike in redemptions. Bendigo Bank earned $23 million in fees from the fund in 2007 including $1 million in loan origination fees that were capitalised.

ASIC does not address the issue of equity between unit-holders in its regulatory guidance note.