Wellington Capital PIF/Octaviar (MFS) PIF

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Just had a look at the March Investor Update. Smoke and Mirrors

I can't see the relevance of the 'Update of Financial Market Conditions'. Smoke. PIF is a fund - a lender - so interest rate rises are good ... Right? Unless this leads to loan defaults or arrears - no prob there according to the Update.

Likewise for the share market fall. Smoke. Normally falling share markets pushes capital into property ... Right? There's property exposure throughout PIF.

The Mirrors is the corporate structure - 'what AM I looking at?'. 'Commercial Loans', 'Asset Backed Investments', 'Property Backed Management Schemes', 'Fixed Interest Investments' & 'Cash Investments' - all create a nice image but what's behind them. What's behind the glass? How much of it is in related companies which will vanish into thin air if they go under. Look at the February update - there were two blocks of related parties - in March there is only one.

PIF should NEVER have been saddled with debt. MFS/Octaviar Ltd board used PIF as a cash cow. All signed off by the Chairman. Looks like to prop up the OCV, LLA& GPM share prices to justify Director bonuses. Taking out margin loans helps prop up the price too .... until the inevitable happens.

Credit squeeze means cash is king means PIF should be laughing. Right.

How is the debt being paid off? For a start, how about by not paying distributions . 755M 1$ units paying an average of 8.5% pa. Thats $64M PIF will 'generate' in 360 days. WE, the PIF investors, are paying off the debt.

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

Well said Duped, I think you pretty much summed it up. What do you think Wellington / Jenny Hutson is going to do about the current situation. I feel they will bash the old regime and reveal the goings on as you stated, she will then turn this transparency into a "we will not stop till se get the last cent we can for you poor folk", in an attempt to HOLD our money above and beyond the 360 days and we will more than likely be put into a newly created fund, which may then go out and seek new investors as well, if we take our money on the 360 day lifting of freeze we get say 70c for our dollar, but if we leave it in there with WC for say 2 years we MAY see closer to our full capital whilst obviously earning some % rate of return. What do you think?

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

Duped writes....
"How is the debt being paid off? For a start, how about by not paying distributions . 755M 1$ units paying an average of 8.5% pa. Thats $64M PIF will 'generate' in 360 days. WE, the PIF investors, are paying off the debt"


That, no doubt is why the RBOS froze our interest distributions - to get the cream first, before anyone else - I'll be glad to see the last of that global parasite. If OPIF has to get another refinancing loan without OPIF control strings attached, then I'm all for it....particularily if it allows distributions immediately after.

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

Investor update for March 2008 is up on the Octaviar website today..our dollar value as at 31 Mar has gone down to 92.8c, wonder how much that really is today, or more importantly what it will be when there will be enough "liquidity" to pay out redemptions? I hate to think!!!

G'day Javier,

$890.1 mill (feb) less $869.4 mill (march) = $20.7 mill spent

RBOS owed $184 mill (feb) less $168 mill (owed march) = $16 mill paid off

$20.7 mill minus $16 mill = 4.7 mill Where did the 4.7 million go in one month? Is that what it costs a month to run the OPIF show?

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

Who knows..????

 

[wally3218]

Re: Octaviar MFS Premium Income Fund PIF

What better way to recoup some of your lost money than to arange a general meeting and to get yourself appointed as director and your friends to the board.
That way you can be paid a salary and not have to worry about distributions.
Does anyone know how much the directors are getting paid to help themselves there definately not helping us.

 

[Tuart]

Re: Octaviar MFS Premium Income Fund PIF

Breaker1 well done for starting this thread. I am a member of HotCopper and suggested that the PIF needed its own forum over there as the interests of PIF are certainly not aligned with interests of OCV shareholders.

I have been following the PIF issues closely as a I have close friends caught up in the mess and I was also aware of an offer to OCV to acquire the RE which manages the PIF from PIF.

The group wishing to acquire the RE was a major european insititution with billions at their disposal who saw an opportunity to enter Aust through undertaking a workout of PIF on behalf of the 11000 investors.

They could not even get in the front door with OCV to conduct due dilegence. They provided details to OCV as well as JH at Wellington in her position as advisor to Chris Scott and despite numerous phone calls and written communication did not even get a returned phone call.

This group was told by a lady called Louise Edwards at Octaviar that OCV had over 25 expressions of interest from parties wishing to acquire the management rights of PIF.

The bottom line is that JH has mislead the PIF unitholders if the statements in the paper are correct. She stated that hers was the only real offer and "no one else got close to due dilegence." If you do not consider any other offer then of course your own offer becomes the only offer!

The party I am aware of could understand if they were beaten by a better offer but they werent. They had serious money available to fix the problems such as RBOS. Wellington claim to have 600 million under management but if this is all in non liquid assets what good is it to PIF.

What money is Wellington putting in to fix the problems. So far we have seen the fire sale of the GEO shares and now a further proposed haircut on the LLA loan.

PIF needs an RE who can pay the bank and put funding in to see developments finished.

You have had Korda Mantha as well as the staff at PIF working for months on this and yet the first statement JH makes is "that its a mess and we will need a few months to understand the position". That is total cr--.

I think there is about 38 investments held by PIF. Not hard to understand the position and they know it just do not want to tell the investors.

Its strange that the only deal avaialbel on PIF to OCV was to an advisor of Chris Scott. How is she going to deal with the $50 million issue.

I would suggest PIF unitholders call a meeting. You will find that you will need x number of investors to requisition. (number can be provided by existing RE)

Issues that should be discussed at meeting is:
1) Full disclosure of the 25 parties who approached OCV to acquire managemetn rights.
2) Full disclosure of current position including what losses have been incurred to repay bank.
3) Tender process to be undertaken to replace RE with party capable of providing funding to ensure maximised work out.

One of the things I do not understand is why instead of PIF taking a loss on LLA loan doesnt PIF replace Artic and act like the vulture fund and convert debt to equity.

LLA would require an additional far smaller rights issue but PIF could claw back a lot of its losses just from this one step.

The offer I was aware of included a proposed workout of LLA so that losses like these were not needed.

Anyway I hope that this forum can help investors in PIF because as a group you have power but alone you have none and are dictated to by the likes of Wellington Capital.

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

Are you prepared to provide proof of this so called european institution not being allowed to make their proposal or to exercise due diligence? If you are I am prepared to take it further or else it's just talk on a forum, which counts for nothing. Please send me a private email and I will bring it up in the soon forthcoming investor meetings.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

G'day Javier,

$890.1 mill (feb) less $869.4 mill (march) = $20.7 mill spent

RBOS owed $184 mill (feb) less $168 mill (owed march) = $16 mill paid off

$20.7 mill minus $16 mill = 4.7 mill Where did the 4.7 million go in one month? Is that what it costs a month to run the OPIF show?

Wasn't PIF paying distributions until 12 March? Many investors would be drawing the income; accounting for some of the cash going out the door. 12 days @ 8.5%, 50% of investors is ~ $1M, 75% of investors is ~ $1.6M, 90% of investor is ~ $1.9M. % could be very high

+ plus writedowns of the 'investments'.

Don't forget that PIF would have had cash coming in the door as well from the 'investments', add that to the 4.7M. I'm hoping they weren't all dodgy, self aggrandizement investments; but I wouldn't put it past MFSIM.

By my calcs based on the Feb Update 24.7% of the 'assets' were with MFS related entities. Subtract the $184M debt indicates that 31% of the 'value' was with MFS related entites. Please, please please correct me if I'm wrong.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Duped, Distributions from the PIF stopped in January.Regards, Seamisty

 

[Tuart]

Re: Octaviar MFS Premium Income Fund PIF

Javier

tuart@live.com.au

I will be offline for a few hours but will try and get a copy of the EOI lodged by party with OCV over to you.

As I said Louise Edwards of OCV itself provided the number 25 as the number of parties who lodged interests with OCV regarding PIF and so ASIC could under their powers issue her with a notice to get the truth.

Also if you read the article in AFR it quotes Jenny Hudson herself as saying that they had numerous approaches "but no one else came close to doing due dilegence".

No one else came close as OCV would not talk to anyone else as they wished to only do a deal with a friendly party either for CS self benefit or else becuase WC is more likley to do deals which are best for OCV.


Breaker they have moderated your post at HotCopper so unless readers got in quick they no longer have reference to this forum.

.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Shall take your word for it over Guy Hutchings' letters. I've just had a look at them and they are misleading (http://www.octaviar.com.au/managed-funds/premium-income-fund/).

Letter of 29 Jan states "MFSIM currently expects to continue paying distributions at the target distribution rates*"

Next letter, dated 12 March, mentioned ceasing of distributions: misleading or did he just conveniently delay sending the letter.

12 March: "ceased distributions ... to conserve cash in order to continue to fund PIF's development projects". That's like a boss borrowing against a company for a ferrari then telling the staff they'll have to take pay cuts or the company could lose clients/business and you all could lose your jobs, not telling staff about the debt the company is carrying for his largess.

First mention of breach of $184M debt was in the letter of 29 March. WOW! Take your time pal.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

As I said once before Duped, we were all Duped!!!We re-invested in Jan and only got one payment. I know of several others in the same situation. We were not notified so I rang OCV and asked where the Feb distribution was. I have been constantly lied to, misled, fobbed off and totally ignored ever since. Someone else has spoke personally to an ASIC representative, here is a copy of the letter he wrote to which I added our name. Regards, SeamistyDear Sir



I invested $XXX dollars with the MFS Premium Income Fund now Octavia PIF on Jan13 2008 which represents a significant part of my retirement savings



As you will no doubt be aware the Octaviar PIF is now in serious financial difficulty having debts of $184 million dollars against assets of $770 million dollar and breached a loan Covenant by the Royal Bank of Scotland on DECEMBER 31st 2007



The published assets as of DECEMBER 31st 2007 printed in the PDS contain no mention of any debt or LVR Covenant in the fund which is extraordinary as this loan now represents a substantial component ( approx 23%) of the total value



Investors were only informed of the debt ,Covenant and subsequent standstill agreement approximately 11 weeks after the event on MARCH 19th 2008 when that information and the consequences were made public by accountants Price Waterhouse and Coopers who stated plainly that their is a material uncertainty whether the fund can remain a going concern in the half yearly account to December 31st 2007



I telephoned the Company and asked them why, “I had not been informed of the problems BEFORE I made my investment on JANUARY 13th 2008 and why their published assets on DECEMBER 31st 2007 listed in the PDS contain no mention of the debt level or Bank Loan Covenant under the ASX rules of continuous disclosure”.



They informed me that they were “, not obliged to directly publish details of the debt in the PDS and in addition they had reached a standstill agreement with the RBOS in JANUARY”



Although the PDS does state that the Fund had a loan facility agreement whereby they could draw up to 20% of the value of total assets. , to provide short term funding for opportunistic investments .We are gravely concerned as to the legitimacy of a published document dated December 31st 2007 (provided)that clearly purports to demonstrate an asset base untainted by debt of this magnitude ..This subtle camouflage of the real debt position clearly makes a mockery of the transparency ,honesty and fairness required under ASX guidelines.



IT is also difficult to understand how 184 million dollars primarily loaned to other OCV related entities could ever hope to be repaid in the short term under the conditions stipulated above





In any event regardless of whether or not they had reached a standstill agreement with the RBOS is irrelevant. The fact remains that the business was in serious financial difficulty having breached a Covenant that in effect gave RBOS the right to immediate repayment OF a mASSIVE loan tHIRTEEN days BEFORE MY INVESTMENT was MADE ON 13 JANUARY 2008 .



Furthermore the standstill agreement was essentially only a stopgap measure of limited duration used to forestall the direct impact of a severe liquidity crisis .The PIF had made an unsecured loan of 67 million dollars to the OCV entity Living and Leisure who themselves were in dire financial difficulty and unable to repay that debt



Moreover it specifically states in the PDS that all Commercial loans should have an LVR ratio of at least 66% and yet this particular loan did not even have first mortgage security.Only now after living and leisure have defaulted on the loan have the PIF belatedly attempted to negotiate some protection over the assets of living and leisure for investors.



In view of the fact that Living and Leisure was suspended from trading on January 19th by the ASX for failing to provide audited accounts, it would appear highly likely that this company was unable to service its debt of 67 million dollars or eight percent( 8 %) of the total assets of the PIF well before that date . However their is no mention of this in the December 31st PDS which record the PRINCIPLE of loans in default as 17 million or( 2.2%) of the total assets



The desperate financial situation of the PIF at this time was in fact confirmed by Price ,Waterhouse and Coopers who have stated unequivocally that their was UNCERTAINTY SURROUNDING MFS and its RELATED ENTITIES WHICH HAS IMPACTED ON THE RECOVERABILITY OF CERTAIN ASSETS OF THE FUND. TO DECEMBER 31ST 2007



Therefore it would be absurd to believe that ANY REASONABLY INFORMED person would have placed an investment under these conditions in this Fund had this information been generally available AFTER DECEMBER 31st 2007



Indeed recent events have demonstrated how grim the financial situation has become. It is now patently obvious that the Fund has been given an ultimatum by the RBOS as assets are being sold at fire sale prices in a frantic attempt to pay out the loan .This will inevitably result in very significant losses for PIF investors.



Given the above state of affairs would you please inform us if an ASX listed Company can keep the fact that it has Breached a Bank Covenant a CLOSELY GAURDED SECRET from an investor under the ASX rules of continuous disclosure Clause 3.1 Chapter 6CA Section 674(2) and if such action contravenes the provisions of the Corporations Act namely if the information was generally available it would have a material effect on the price or value of the entity”. .



As far as I can determine the Corporation Act is simple and unambiguous in its definition of a Companies responsibility in these circumstances. I would therefore presume that the two entities that formulate and administer these rules either (ASX or ASIC) would not experience any great difficulty in rendering a decision either positive or negative within a reasonable time frame.



The lives of many retired pensioners and self funded Superannuation members who trusted this company completely are now at risk. These investors placed their savings in the company to provide an income for the necessities of life and now find themselves facing hardship.



We therefore respectfully request your urgent help and earnestly trust you will endeavor to bring this matter to a speedy resolution so that investors are able to proceed without delay with their own legal process in a timely manner.



I am also writing this letter on behalf of other investors listed below who placed their money in the Fund after December 31st 2007



Yours sincerely

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Understand and thanks.
re-invested on Jan 13... ouch. That's a big dose of salt.

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

Javier,
I think you could be right. Ms Hutson has a good reputation as a lawyer and business woman. She and WC may well save the day. What else is on offer? The PIF phone calls I make are increasingly useless. The staff are getting crabby amd easily rattled and have lost sight of the fact that it's OUR money that we want back. They almost seem to convey a sense that the mess is really all because of us annoying investors. Still, what happens if Octaviar Ltd falls over? Does anybody know anything about the new board members recently appointed to oversee PIF?

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

Tuart -
Sorry, for some reason I missed your post. If there were other offers to take over PIF as you state, well my previous comments re WC no longer stand.

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

Javier

tuart@live.com.au

Breaker they have moderated your post at HotCopper so unless readers got in quick they no longer have reference to this forum.

.

Thanks for the tip - I have put another post on hot copper asking for their graces to leave the link in their as a "one off" for the sake of aggreived OPIF investors - see what happens.

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

For those wanting the details of forcing the calling of a general metting by members on the OPIF - some key points as follows:
* You need at least 100 members to make the request OR 5% of unit number voting rights (would need 3,850,000 unit votes approx. - so several investors with over $1 mill invested needed here). 100 members may be the best shot?
* must be given to OPIF in writing
* must be signed by the members
* state any resolutions to be proposed at the meeting

Corporations Act 2001 - relavant sections 249D & 249F under
Section 249D Calling of general meeting by directors when requested by members
(1) The directors of a company must call and arrange to hold a general meeting on the request of:
(a) members with at least 5% of the votes that may be cast at the general meeting; or
(b) at least 100 members who are entitled to vote at the general meeting.
(1A) The regulations may prescribe a different number of members for the purposes of the application of paragraph (1)(b) to:
(a) a particular company; or
(b) a particular class of company.
Without limiting this, the regulations may specify the number as a percentage of the total number of members of the company.
(2) The request must:
(a) be in writing; and
(b) state any resolution to be proposed at the meeting; and
(c) be signed by the members making the request; and
(d) be given to the company.
(3) Separate copies of a document setting out the request may be used for signing by members if the wording of the request is identical in each copy.
(4) The percentage of votes that members have is to be worked out as at the midnight before the request is given to the company.
(5) The directors must call the meeting within 21 days after the request is given to the company. The meeting is to be held not later than 2 months after the request is given to the company.

OR
Section 249F Calling of general meetings by members
(1) Members with at least 5% of the votes that may be cast at a general meeting of the company may call, and arrange to hold, a general meeting. The members calling the meeting must pay the expenses of calling and holding the meeting.
(2) The meeting must be called in the same way””so far as is possible””in which general meetings of the company may be called.
(3) The percentage of votes that members have is to be worked out as at the midnight before the meeting is called.

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

losses for PIF investors.

Given the above state of affairs would you please inform us if an ASX listed Company can keep the fact that it has Breached a Bank Covenant a CLOSELY GAURDED SECRET from an investor under the ASX rules of continuous disclosure Clause 3.1 Chapter 6CA Section 674(2) and if such action contravenes the provisions of the Corporations Act namely if the information was generally available it would have a material effect on the price or value of the entity”. .

I am also writing this letter on behalf of other investors listed below who placed their money in the Fund after December 31st 2007

Yours sincerely

A top detailed letter Seamisty!

ASIC is such a spongy government body and they take forever to do anything. As you know my letter via my local member is with them now. I am just left wondering what they CAN actually do that would be of any benefit to us and fellow OPIF investor? If OPIF are at fault, can ASIC take legal action? If they can, do you end up with more than you could of got? The problem is - this spongy ASIC also is not transparent, not only in what they do, but in what they can do! We won't understand their worth to us individually until they actually contact us and DO something positve! "You will know them by their works!"

 

[DoraNBoots]

Re: Octaviar MFS Premium Income Fund PIF

Hi All, we are fellow OPIF investors and are glad to have found this thread today.

Count us in for calling of a general meeting. I'm certain we are not the only people who would like to get more detail on the assets held within the fund and strategy OPIF management have to resolve whatever issues exist.

I have become furious reading how poorly this fund has been managed due to its incestuous relationship with its parent company and want to find out what will happen to OPIF and our funds if Octaviar goes belly up.

Your Sincerely,