Wellington Capital PIF/Octaviar (MFS) PIF

[The Owls]

Re: Octaviar MFS Premium Income Fund PIF

There should be mandatory updates on their websites on a weekly basis, transparency about all aspects of the loan arrangements between the fund and the borrowers, and full disclosure about any financial facility arrangments that are or have been in place.

What you have said is very true. There are many unlisted property funds out there that are operating in the same manner as Wellington. Some send notices every 3 months with statements such " We are committed to cash payments to unitholds as soon as the fund is in a position to do so. or we are doing everything possible to protect your capital."

What I would like to see is a proper plan with proper time frames and exactly what the fund managers are doing.- not statement like we are doing our best etc.

 

[Dexter]

Re: Octaviar MFS Premium Income Fund PIF

When will JH follow through on any of her promises?

Any comments or current thoughts re my post No: 337 on 17th June 2008. (page 17).

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

The PIF update and financials are now on the NSX http://www.nsxa.com.au/ftp/news/021721830.PDF Regards Seamisty

 

[mellifuous]

Re: Octaviar MFS Premium Income Fund PIF

Hi follks, I'm an investor (loser) in FMF. I've just been sent a copy of your Fund's Update. I'm really surprised that your manager is going on with the old line of 'completing the development', to keep the drip flowing to the lenders.

In the FMF, I believe this action was the cause of great losses to the fund, especially when contracting with so called 'development partners' (those who bring in the money, but want as Shiloh did, 'a pound a flesh').

Further, I notice that your manager has a given an undertaking to the Supreme Court of Queensland not to draw management fees unless certain conditions prevail.

However, does your manager take 'direct fees' from lenders? I've been asking this question of the new manager of the FMF for quite some time now and they simply refuse to answer.

From newspaper reports it seems that City was taking up to $20m in these fees directly from lenders. I'd guess they continued to take them (ahead of the FMF) right up to the day they lost the mangership of the FMF.

When a fund is frozen and income into the fund has stopped, any money that a manager takes directly from a lender comes straight out of the pockets of the investors in the fund.

I think its a worthwhile question to ask managers.

I hope this information might be of use to you.

I've often wondered why members of the PIF don't have a meeting and de-list the fund since listing the fund seems to have been quite a disaster and caused such a great deal of stress to many investors in the PIF.

 

[lawry1dog]

Re: Octaviar MFS Premium Income Fund PIF

I agree with mellifuous.

If we have the Unit Holder list, then why don't we hold a meeting ASAP,
and de-list the fund, and find a bank to take over our Fund.

As I said before, the latest WC Update, says :- the difficulty has been the lack of buyers for the 11 assets which were prepared for sale and then marketed over the last 4 months.
Consequently the Fund has not been able to make any cash payments to Unitholders. My team continues to focus on finding ways to maximise the value of the underlying assets.

Which proves my predictions are correct. Also I notice the Unit value went down to less than 6c, which indicates WC should resign ASAP.

WC thinks they did a great job in repaying the debit facility, which I do not think should have existed in the first place. So WC did something, lets move on, as it is old news (over 9 months ago).

How come Breaker was not elected?

Come on lets get our act together.

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

I've had a quick read through of the Annual Report and other releases on the NSX but don't see any indication of who the PIF paid 25% interest to on the $20M borrowed to pay off debt - have I missed it? or is it just not there? I thought we were to learn that information when the year end reports came out.... Where is the transparency???

 

[Cookie1]

Re: Octaviar MFS Premium Income Fund PIF

Re the Investor Advisory Committee, would the Wholesale PIF units have been voted as a block? 84.4M units would have been a lot of votes for each of 3 candidates...if so, who decided who those votes would go to? Just wondering???

Am very disappointed none of the PIF Action Group leaders who nominated for the IAC were voted in. Does this mean they can no longer communicate directly with WC and JH as in the past? I hope not as they've been a wonderful source of information and support for all of us.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

If it is there it is heavily disguised Cookie1!! Why am I not surpised? Seems it is ok to reveal the top 10 holders to all and sundry but keep important information that further financially burdened the PIF a closely guarded secret. WHAT TRANSPARENCY????? Seamisty

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

It is like another kick in the guts...again and again. It really is not right, this lack of full disclosure to unitholders.
It is difficult to understand why not ONE of the prominent identities of this forum have been elected to the ICC...this site has incredible exposure, over 275,000 views..! ! Most viewers and posters alike have an affinity with some of the identities from this forum that ran for election to the ICC....what ever happened..? ?
I think we should collectively demand to know the details of the loan on which we payed 25% interest..

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

k.smith it would be interesting to get hold of the (real) vote results!! Do any of the elected IAC candidates post on here or does anyone actually know them? Perhaps we could send a request to iac@newpif.com.au asking our newly appointed reps if they would please consider using the forum as a contact/discussion point? Many investors do not waste their time with the hotline or WC investor relations email any more as they are sick of not receiving replies. Very dissapointed (and not surprised) that the AG did not get a rep elected but I was told months ago by a Fund manager that the IAC would be a total farce and a waste of time. I sincerely hope that is not the case. Regards, Seamisty

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

After scanning the report intro, I get the feeling that we'll be reading it again in a slightly modified version in a year's time. WC seem to think that we are all dullards, prepared to ingest their shameless self-congratulatory comments time and again. Lawry1dog, your sentiments may become infectious. My allegiance will continue to be to the AG's energetic and dedicated committee. Is there anything written in the report about a teleconference between the IAC and WC? That was the original plan: dial a number and listen in. The class action should help keep our spirits up. But it's a slow process...thanks to the AG we now have lawyers inspecting vital files and that's a comforting thought.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

This interesting reading is off the Allens Arthur Robinson website:::Focus: Mistakes and misdeeds: Setting aside the Octaviar DOCAs
1 September 2009
In brief: The Queensland Supreme Court recently set aside two deeds of company arrangement because they were not in the best interests of the company's creditors, and because misleading and incomplete information had been provided to the creditors at the time they voted on whether to approve the two deeds. Senior Associate Christopher Prestwich and Lawyer Ruth Greenwood report.

Background
The OA DOCA: Contrary to the creditors' interests?
Grounds for setting aside the OL DOCA
What you should be doing in light of the decision
How does it affect you?
When administrators are appointed to a company, a deed of company arrangement (DOCA) is one possible outcome that the creditors can agree to instead of a liquidation. DOCAs are straightforward to implement and are flexible in terms of the outcomes for which they can provide. Creditors would typically vote for a DOCA if it offers a better return than a winding up.
This case illustrates the broad powers that the court has to set aside a DOCA, even against the wishes of a majority of creditors. It also demonstrates that if the proponent of a DOCA wishes to limit the chances of it being set aside, it must ensure that the DOCA offers a better outcome for creditors than a liquidation. Administrators must also take care to ensure that creditors are provided with a proper analysis of the likely outcome of the DOCA as compared with a liquidation, and provide complete and correct information about matters which creditors should take into account when deciding whether or not to vote in favour of a DOCA as opposed to a liquidation.

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Background
Administrators were appointed to Octaviar Ltd (OL) and Octaviar Administration Pty Ltd (OA) in September 2008. A DOCA was proposed for each of those companies by a secured creditor of OL, Fortress Credit Corporation (Australia) II Pty Ltd (Fortress), which was a secured creditor by way of the operation of a charge over OL (the Fortress security). Fortress contended that each DOCA offered a better outcome for creditors than under a liquidation.

The administrators recommended that creditors vote in favour of the OL DOCA, but that they reject the OA DOCA and put OA into liquidation instead. At the second creditors' meeting, the required majority of creditors of both OL and OA voted in favour of the DOCAs which had been proposed by Fortress.

One of the creditors of OL, the Public Trustee of Queensland (the Public Trustee), subsequently brought an application seeking to have both of the DOCAs terminated under section 445D of the Corporations Act 2001 (Cth) (the Act). The Public Trustee contended that the DOCAs should be set aside because a liquidation would be in the best interests of creditors, would avoid unfairness to some creditors under the DOCAs and would be in the public interest generally.1

Earlier this year, the Supreme Court of Queensland held that the Fortress security was invalid but that decision has been appealed.

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The OA DOCA: Contrary to the creditors' interests?
Justice McMurdo held that the OA DOCA provided no benefit to the creditors of OA; rather, it was intended to 'facilitate' the OL DOCA. As such, its effect was very similar to a liquidation, save that certain claims which would be available to a liquidator would not be available in a DOCA.

The administrators had concluded that creditors should not vote in favour of the DOCA because it did not offer a better outcome than a liquidation. Even though the creditors had voted for the DOCA, Justice McMurdo held that the OA DOCA should be set aside under s445D(1)(f) of the Act on the ground that it was 'contrary to the interests of the creditors of the company as a whole'. Alternatively, Justice McMurdo held that even if the DOCA did 'facilitate' the OL DOCA and thus offer some benefit to creditors of OA who were also creditors of OL, then it should still be set aside – on the ground that it was unfairly prejudicial to those creditors of OA who were not also creditors of OL.

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Grounds for setting aside the OL DOCA
Contrary to the interests of creditors as a whole
The OL DOCA was premised on the validity of the Fortress security and provided for Fortress to receive more than it would receive if it were an unsecured creditor. Justice McMurdo found that the OL DOCA would subvert the usual operation of the law to the detriment of the creditors, and should be set aside as being contrary to creditors' interests. Given that the court's earlier decision to invalidate the Fortress security was on appeal, his Honour went on to consider the position of the OL DOCA even if the Fortress security was valid.

The main asset of OL was a distribution it expected to receive from OA. The administrators argued that the effect of the OL DOCA was that it would defeat a garnishee notice lodged by the Australian Tax Office (the ATO) against OA. The ATO garnishee notice had been issued to OA in the ATO's capacity as a creditor of OL. If the garnishee notice could be trumped, then the return to ordinary unsecured creditors would be improved.

Justice McMurdo concluded that the administrators' interpretation of the way the OL DOCA would operate was incorrect. In a liquidation, there would be a range of possible recoveries that a liquidator might make. Those claims would not be available under a DOCA and, accordingly, the OL DOCA would not put creditors in a better position than would a liquidation. The OL DOCA was set aside on that basis.

Misleading information and omission of information
Justice McMurdo found that there were a number of instances of misleading information that had been provided to creditors and omissions of material information that constituted grounds for the OL DOCA to be set aside. By way of example, creditors were not sufficiently informed of:

the possibility that the ATO's claim would rank ahead of creditors' claims;
an explanation of the terms of the proposed OL DOCA;
the entitlements of Fortress, the ATO and another company in the Octaviar group;
the potential recoveries under a loan facility that had been guaranteed by OL; and
whether the date of OL's insolvency was earlier than the date identified by the administrators, such that additional claims would be available to a liquidator.
Justice McMurdo found that each of these misleading statements or omissions meant that the creditors were not able to compare the outcome of the OL DOCA with a winding up.

Although a majority of creditors voted for the OL DOCA and a number of creditors still supported it at the hearing of the Public Trustee's application, Justice McMurdo held that this was of 'little significance' and that the grounds for setting aside the DOCA had been made out.

Justice McMurdo noted that regardless of whether the Fortress security is upheld as void on appeal, the misleading comparisons and the prejudicial effect of the OL DOCA mean that it should be terminated under s445D of the Act.

Public interest in the affairs of the Octaviar group being examined by a liquidator
The Public Trustee argued that there was a public interest in the affairs of the Octaviar group being examined by a liquidator. In particular, it argued that there were a substantial number of potentially voidable transactions that should be investigated by a liquidator.

Although Justice McMurdo found that the terms of the OL DOCA were not, on their face, offensive to commercial reality or, more broadly, to public policy, he noted that there is a public interest in the size of the corporate collapse and the fact that it has had an impact on many institutions and individual investors. His Honour commented that the public interest in a financial inquiry needed to be balanced against the unfairness to the creditors.

Ultimately, Justice McMurdo found that, on balance, s445D(1)(g) did provide another ground for termination of the OL DOCA because the size of the potential recoveries that may result from a liquidator's inquiry may be substantial and the liquidator's inquiries 'would lead to at least some of the persons responsible for some of the group's demise being brought to account'.

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What you should be doing in light of the decision
This decision highlights the fact that the court has broad-ranging powers to set aside a DOCA even against the wishes of a majority of creditors.

Proponents of a DOCA must ensure that it offers a better outcome to creditors than a liquidation – otherwise it is liable to be set aside. Proponents must also ensure that the DOCA is not unfairly prejudicial to a sub-class of creditors.

Administrators must exercise great care in preparing s439A reports to creditors and in determining whether to recommend a DOCA to creditors. Incorrect information in that report or the omission of material information are also grounds on which a court might subsequently set aside a DOCA.

Footnotes
Re Octaviar Ltd (No.8) [2009] QSC 202.
Published 1 September 2009

 

[lawry1dog]

Re: Octaviar MFS Premium Income Fund PIF

Love everybody's persistence and I am with you all the way.

Still think WC must now resign or we form meeting ourselves and vote on being de-listed from the NSX and inviting banks or whatever the chance to manage our fund.

WC seemed to have goofed by there legal proceedings, which we paid for, and then seemingly WC lost. Did WC really think they could take on the Government.
Yes, we did pay for the legal proceedings, as stated by Caroline Snow(CEO):-
Wellington as responsible entity of the Premium Income Fund have been party to a number of court proceedings since 2 May 2008, and consequently the Premium Income Fund has paid the legal fees and expenses incurred in relation to the initiation and conduct of these court proceedings inorder to protect the interest of Unitholders.

WC did not win anything at all, and so how did they protect the interest of Unitholders. Did they think the PTQ would come after our fund, as that is the only thing, I can think of? Anyway how much are we talkng about?


I will be adding up the financial figures and seeing if somebody else can manage our fund, from my figures.

WC has had there chance now for 1 year, and the fund has gone backwards. We are not in a recession and there is money to be made out there now.


Come on, lets send out a mailer to all unitholders and form a meeting.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

re the Annual Report?

Of the $62.486M of 'Other financial assets', $26.877M is with OCV related entities LLA & Octaviar Causeway P DOF. Anyone know the nature of the other $35.609M? It represents 12% of the fund value; i.e. 4.7cents per unit. Any chance of us getting paid out by this asset?

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

...
WC seemed to have goofed by there legal proceedings, which we paid for, and then seemingly WC lost. Did WC really think they could take on the Government.
Yes, we did pay for the legal proceedings, as stated by Caroline Snow(CEO):-
Wellington as responsible entity of the Premium Income Fund have been party to a number of court proceedings since 2 May 2008, and consequently the Premium Income Fund has paid the legal fees and expenses incurred in relation to the initiation and conduct of these court proceedings inorder to protect the interest of Unitholders.

WC did not win anything at all, and so how did they protect the interest of Unitholders. Did they think the PTQ would come after our fund, as that is the only thing, I can think of? Anyway how much are we talkng about? ...

In my lay opinion and from what I've read I wouldn't call WC's legal affront reckless. After all, in hindsight, the approx 22c in the $ offer by OCV this time last year looks like it was an excellent offer. PTQ missed that one. WC didn't. (Whether or not the deal could have worked is of course an important question. Maybe PTQ saw the answer would be NO.)

While PTQ's wild swinging of punches is costing us big $$$ a lot of that could probably have been avoided without the counter position of Fortress and Deloitte. A counter position that is hardly diminished by WC's backing.

Look at the pasting Deloitte is getting from McMurdo.

One:- first McMurdo ruled against Fortress' secured creditor status. Deloitte didn't push back against Fortress on that one.

And next, as succinctly put by Allens Arthur Robinson (posted by seamisty), McMurdo landed another two on Deloitte.

Two:- McMurdo disagreed with Deloitte that liquidation couldn't defeat the ATO's garnishee notice. Or something along those lines.

Three:- McMurdo then went on to say, more or less, that Deloitte's "misleading statements or omissions meant that the creditors were not able to compare the outcome of the OL DOCA with a winding up."

Is this a pasting or the usual argy bargy over interpretation that goes on at this level?

Either way, I don't know what rules Deloitte are playing by but they certainly don't seem to be the rules according to McMurdo.

But who's paying for the guns and soldiers in this skirmish. The creditors - i.e. you and me. From my perspective - this is legislative failure!!!!

 

[marcom]

Re: Octaviar MFS Premium Income Fund PIF

These are the hearings that were foreshadowed in the WC Update - the PTQ is seeking to have Deloitts removed as liquidators and provisional liquidators for these Octaviar entities.

COMMERCIAL LIST
RE: OCTAVIAR LIMITED (FORMERLY MFS LIMITED)
Justice Philip McMurdo
Banco Court
Floor 2
9:30 AM
(Hearing)

RE: OCTAVIAR ADMINISTRATION PTY LTD
Justice Philip McMurdo
Banco Court
Floor 2
9:30 AM
(Hearing)

RE: OCTAVIAR ADMINISTRATION PTY LTD
Justice Philip McMurdo
Banco Court
Floor 2
9:30 AM
(Hearing)

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

Hi follks, I'm an investor (loser) in FMF. I've just been sent a copy of your Fund's Update. I'm really surprised that your manager is going on with the old line of 'completing the development', to keep the drip flowing to the lenders.

In the FMF, I believe this action was the cause of great losses to the fund, especially when contracting with so called 'development partners' (those who bring in the money, but want as Shiloh did, 'a pound a flesh').

Further, I notice that your manager has a given an undertaking to the Supreme Court of Queensland not to draw management fees unless certain conditions prevail.

However, does your manager take 'direct fees' from lenders? I've been asking this question of the new manager of the FMF for quite some time now and they simply refuse to answer.

From newspaper reports it seems that City was taking up to $20m in these fees directly from lenders. I'd guess they continued to take them (ahead of the FMF) right up to the day they lost the mangership of the FMF.

When a fund is frozen and income into the fund has stopped, any money that a manager takes directly from a lender comes straight out of the pockets of the investors in the fund.

I think its a worthwhile question to ask managers.

I hope this information might be of use to you.

I've often wondered why members of the PIF don't have a meeting and de-list the fund since listing the fund seems to have been quite a disaster and caused such a great deal of stress to many investors in the PIF.

$20M is very good income for this upfront style of fee. So these upfront fees replaced normal interest profit on lending which should have come into the CP fund as general revenue for distribution to investors or expenses paid. Very cunning if true!

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

Breaker,
I would like this issue of "direct fees" discussed....
Is it common practice for MIS to charge these fees,
and what happens when the fund is illiquid? How are these fees accounted for in financial statements?

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Breaker,
I would like this issue of "direct fees" discussed....
Is it common practice for MIS to charge these fees,
and what happens when the fund is illiquid? How are these fees accounted for in financial statements?

Perhaps Breaker could present WC with a list of concerns/questions on behalf of AG members which need more clarification? I would like the following clarified:::

Question for WC. In the PIF annual report dated 30 June 2008 it clearly states on page 26 that the bank debt had been re paid as at 31 July 2008 and a new loan facility had been entered into with a non-bank facility on 1 August 2008 for $20mill of which $9.5mill was drawn (source remains anonymous). Why then in the next years 2009 financial report are we paying PriceWaterhouseCoopers $107,030.00 for preparation of report of asset values for RBOS when the loan had already been repaid? Bearing in mind that PriceWaterHouseCoopers had already been paid $161,679.00 for audit Services in 2008 and not to mention that WC had already received $3.75million from OCV to cover PIF operating expenses and certain Fund costs to August 31 2008, well after our assets had been disposed of to pay down the RBOS loan. When was the audit conducted?
Regards, Seamisty

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Hi follks, I'm an investor (loser) in FMF. I've just been sent a copy of your Fund's Update. I'm really surprised that your manager is going on with the old line of 'completing the development', to keep the drip flowing to the lenders.

In the FMF, I believe this action was the cause of great losses to the fund, especially when contracting with so called 'development partners' (those who bring in the money, but want as Shiloh did, 'a pound a flesh').

Further, I notice that your manager has a given an undertaking to the Supreme Court of Queensland not to draw management fees unless certain conditions prevail.

However, does your manager take 'direct fees' from lenders? I've been asking this question of the new manager of the FMF for quite some time now and they simply refuse to answer.

From newspaper reports it seems that City was taking up to $20m in these fees directly from lenders. I'd guess they continued to take them (ahead of the FMF) right up to the day they lost the mangership of the FMF.

When a fund is frozen and income into the fund has stopped, any money that a manager takes directly from a lender comes straight out of the pockets of the investors in the fund.

I think its a worthwhile question to ask managers.

I hope this information might be of use to you.

I've often wondered why members of the PIF don't have a meeting and de-list the fund since listing the fund seems to have been quite a disaster and caused such a great deal of stress to many investors in the PIF.

Hi Mellifuous, I am sure most would like to see PIN delisted, not only to save the PIF money on a little used service but also to eliminate WC using the NSX listing as an excuse for 'non disclosure' of information due to strict rules of being a listed company. Investors were promised many things from JH when they put their support behind her only to be let down time and time again, especially with the lack of information and transparency JH touted we would get at the Investor Forums and dribbled through numerous media articles!!

In regards to Balmain Trilogy acting as the new RE for FMF has the issue of fees be resolved yet? Are they taking 'direct fees' over and above the 1.5% in management fees? Regards, Seamisty