Australian (ASX) Stock Market Forum

Wellington Capital PIF/Octaviar (MFS) PIF

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gardie said:
How can this be costing Wellington anything when every expense of the fund including staff costs is recoverable and is recovered.

Surely this is a misquote because Jennifer would not be moaning about her missed profits or telling porkies here would she ?

Also article refers to ongoing law suits from borrowers which was alluded to by big Jim. Where is the disclosure to NSX on this matter as they sound like large numbers being claimed in damages.

I am aware of other mortgage funds who have done deals with borrowers to work through project as the developer threatened action as they suffered losses as the fund is the one who went broke and could not continue drawdowns. Not the borrowers fault by the implosion of the fund.
Click to expand...
Hi Gardi, I contacted Mr Ian Craig at the NSX by email relating to the nondisclosure re lawsuits on the 3/5/2010 as follows::

It has come to my attention that there has been an alleged serious breach of the Corporation Act in respect to non-disclosure by Wellington Capital of a current legal action against the PIF while units are actively trading on the NSX? In the event this legal action is successful it will have a huge detrimental impact on our Fund.

The details of the action in the Supreme Court Of Victoria at Melbourne Commercial & Equity Division is Claim No XXXX of 2009. Claim dated XXX August 2009.


Mr Craig ignored the email so I called him and was told by him that Wellington Capital was not obliged to disclose every potential legal claim against the fund. When I queried him about the seriousness of the claim which had been lodged in the Supreme Court he told me that it did not necessarily indicate it was an important claim, that it just meant the developer had ' plenty of money to throw about' or something similar.

I then complained to WC who responded with:
'All relevant information in relation to the Fund has been provided in accordance with the Fund's continuous
disclosure obligations.'

I then complained to the Australian Shareholders Association and heard nothing back. I also complained to ASIC who have done their usual jack ****!!!
This serious complaint is still ongoing and I believe WC have hindered and delayed every process of the claim to date.

So while ASIC keep implementing new stricter controls and disclosure reforms etc and 'released discussion papers on related-party transactions and on independent experts' reports,' investor complaints appear to continue to be ignored and fund managers keep stuffing themselves from the biscuit barrel.

And as for Ms Hutson saying a developer had "run out of puff", I believe it was more a case of running out of funds which does not neccesarily mean the case is over.
I was also told by another developer that he believed Ms Hutson uses the tactics of delaying and hindering specifically for that reason, hoping the complainants cannot afford to continue expensive legal claims while she keeps her snout permanently in the PIF trough!!!

One thing for sure, Wellington Capital may not be entitled to management fees but it does not take a uni graduate to work out that one of the reasons the 3 cent payment has not been made is because the 'snouts' are being adequately sated regardless!! Out of pocket? Not likely!!!:fu:
Seamisty
 
Internal emails show early cash crisis at MFS October 19, 2010 - 3:28PM

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Internal emails and financial documents prepared for failed property developer Octaviar show the company may have been in a ‘‘cash crisis’’ as early as November 2007, a court has been told.

Octaviar was the Gold Coast-based property group previously known as MFS that collapsed in September 2008 owing about $2 billion to creditors.

The public examination into the group was told today that MFS did not have sufficient cashflow to make a $60 million income tax payment it owed at December 1, 2007.

Advertisement: Story continues below Liquidator Kate Barnet from Bentleys Corporate Recovery is trying to determine when the company became insolvent, with the focus on about $1 billion in inter-company transactions.

Former MFS director David Anderson was re-examined by barrister Adam Bell SC, on behalf of the liquidator, in the NSW Supreme Court in Sydney today.

Mr Anderson said, claiming privilege, that he drew down $2.2 million from a premium income fund under his control for use by MFS prior to November 2007, but denied this was to address a ‘‘cash flow crisis’’ within MFS.

‘‘It has always been a group seeking to grow at the fastest rate and funding future expenditure was always an ongoing matter to be dealt with,’’ Mr Anderson said.

Mr Bell said the transaction showed ‘‘MFS was struggling with cashflow problems by the end of 2007,’’ and that ‘‘there was a cash crisis at MFS and no other ready source of funds’’.

Mr Bell asked Mr Anderson whether he was aware that using the premium income fund assets to secure a loan to MFS in this way put the beneficiaries’ assets at risk.

Mr Anderson agreed on balance that appeared to be true.Using internal accounts prepared for MFS’s finance and investment committee, Mr Bell further argued that the Stella travel business was the only profitable MFS business in 2007.

‘‘If you exclude the profit from Stella, on the basis of these figures there was no net profit for the rest of the MFS businesses,’’ he said.

MFS sold 65 per cent of the Stella travel business for about $400 million in February 2008 to private equity firm CVC Asia Pacific.

Bentleys has recovered about $145 million since being appointed liquidator in September 2009.

The case continues tomorrow, when the Public Trustee of Queensland will re-examine Mr Anderson.

http://www.smh.com.au/business/internal-emails-show-early-cash-crisis-at-mfs-20101019-16s3d.html
 
In #6320 Seamisty describes the response to her complaint to the NSX management.

Thanks for the dogged pursuit, Seamisty, but I am aghast. Is there anybody in authority in this country who will listen and act on our legitimate complaints? It seems that ASIC supervises the NSX operation. All roads seem to lead towards the vast ASIC quicksands.
 
http://news.brisbanetimes.com.au/br...s-spent-investor-millions-20101020-16u23.html

MFS 'spent' investor millions
Nicole Stevens
October 20, 2010 - 5:44PM
AAP

The former chief financial officer of collapsed property group Octaviar Ltd can't recall taking any steps to ensure that more than $256 million of investor funds raised in 2007 were used for their intended purpose.

Financial accounts show the company channelled funds from equity raisings in early 2007 into a series of intercompany loans and debt payments, a public examination in the NSW Supreme Court heard on Wednesday.

The Gold Coast-based property group, previously known as MFS, failed in 2008 owing about $2 billion to creditors.

Advertisement: Story continues below
MFS told investors the equity raising was to fund previously announced acquisitions of Sunkids and Sunleisure businesses, barrister Dominic O'Sullivan told the court.

But according to the company's general ledger and operating accounts, those payments were never made, Mr O'Sullivan said.

Former chief financial officer David Anderson said he could not recall any payments being made to Sunkids or Sunleisure.

"I can't see in the documents you have shown me of any payments made to Sunleisure or Sunkids," Mr Anderson said.

Mr Anderson was re-examined by Mr O'Sullivan on behalf of the liquidator for Octaviar Investments Notes Ltd and Octaviar Investments Bonds Ltd, Will Colwell of Ferrier Hodgson.

"Sitting here now ... would you regard it as part of your responsibility to ensure the money was used appropriately, in accordance with the prospectus?" Mr O'Sullivan asked.

"There were special teams set up... This was not my project," Mr Anderson replied.

Mr O'Sullivan asked the former MFS director whether he had "any recollection of a proposition where funds from capital raising would be applied to margin loans?"

"No. I don't know if I was in the country or if I was part of the discussion about this or if I have forgotten," Mr Anderson replied.

Mr O'Sullivan asked Mr Anderson whether the board of MFS expected the funds to be distributed in accordance with the prospectus.

"I don't recall that I held any view about what the board expected," Mr Anderson replied.

"The board would have assumed that things were done as was appropriate."

Mr O'Sullivan said investor funds were paid out in a series of intercompany margin loans, including payments to the Premium Income Fund operating account, Opus Prime, Tricom and Ridgebell.

Investor funds were also used to pay professional fees to Macquarie Bank, KPMG, Freehills and to pay a tax debt, Mr O'Sullivan told the court.

"If the arithmetic is done, it is apparent that the proceeds ... had been spent by the 19th of March," Mr O'Sullivan said.

Liquidator Kate Barnet from Bentleys Corporate Recovery is trying to determine when the company became insolvent, with the focus on about $1 billion in inter-company transactions.

The case continues on Thursday with the examination of former MFS auditor Mitch Craig.
 
Some info on Mitch Craig who is being examined today:

KPMG: the common link in Allco and MFS fiascos
Adam Schwab writes: Crikey 4 February 2008

http://www.crikey.com.au/2008/02/04/kpmg-the-common-link-in-allco-and-mfs-fiascos/

"Of all the similarities between struggling financial companies Allco and MFS, one obvious link has so far escaped media attention: the role of auditor KPMG in the twin fiascos....

Both of MFS’s company secretaries were previously employed by KPMG; David Anderson, chief financial officer of MFS, was previously a partner at KPMG in the finance area while Kim Kercher, MFS’s chief “governance” officer was previously a manager at KPMG.

The auditor signing off on MFS reports (which in light of recent announcements, don’t seem to be entirely accurate) was Mitch Craig (who is KPMG’s National Partner in Charge of Risk Advisory Services)...

KPMG signed off on MFS’s financials on 20 August 2007. MFS shareholders paid KPMG handsomely to ensure that the financial information provided was true and fair. Based on recent announcements, and the sudden departure of executive Michael King, it seems that MFS shareholders didn’t get great value for money..."

This will be interesting in the light of our class action.

Marcom
 
Seamisty, that was an interesting report. Given the revelations about PIF being used as an MFS slush fund and note holders funds being applied to everything but the purposes specified in the prospectus, I am sure that some Directors will meet the fate below:
 
marcom said:
Seamisty, that was an interesting report. Given the revelations about PIF being used as an MFS slush fund and note holders funds being applied to everything but the purposes specified in the prospectus, I am sure that some Directors will meet the fate below:
Click to expand...
Laugh out loud at the pic Marcom!! I can hear them them singing already::

"I'm on the inside looking out.
I can't reach the trough with my short snout.
Oh please, please set me free.
You've got it wrong,we're not the crooks,
We just helped a few others cook the books!
I don't know what all the fuss is about'
I promise I will be good if you just let me out.
Oh please, please set me free, I swear it wasn't me!!"

Seamisty
 
Sorry to say this but I have no expectation of anyone being jailed over the breaches of PIF's PDF. Best to say this now to minimise your disappointment. Have a look at the maynereport.com.au page and list of ASIC's jailings. Nothing but small fry.

Just watch the banks bully the Federal Government. Minining companies' open threatening. Law firms haranguing judges like McMurdo.

The neutralisation of ASIC by the finance sector is a walk in the park.

The finance sector has used our federal institutions as a good cop in their good cop/bad cop routine to, against our natural 'caveat emptor' suspicion, prise our wallets open.
 
Duped said:
Sorry to say this but I have no expectation of anyone being jailed over the breaches of PIF's PDF. Best to say this now to minimise your disappointment. Have a look at the maynereport.com.au page and list of ASIC's jailings. Nothing but small fry.

Just watch the banks bully the Federal Government. Minining companies' open threatening. Law firms haranguing judges like McMurdo.

The neutralisation of ASIC by the finance sector is a walk in the park.

The finance sector has used our federal institutions as a good cop in their good cop/bad cop routine to, against our natural 'caveat emptor' suspicion, prise our wallets open.
Click to expand...
Duped I so hope you are wrong! Sooner rather than later someone will be made a scapegoat to justify taxpayer funded regulators who fail time after time, seemingly only to deliver token punishment if at all and well after the crime has been committed, detected and reported!! The very least I hope is that the crooks are stripped of their assets (no matter how cleverly concealed) and they are pubically named and recognised in any future business connections, along with any other associates remotely related! As for McMurdo, if the cap fits, wear it. He was obviously also conned by WC, the difference being he is in a position where he could still make amends. Any wonder individuals have no faith in the legal system along with the regulatory bodies.

Seamisty
 
If and when I receive my first miserly "distribution", I'll certainly not be raising a glass in the direction of WC. Instead, I'll be totting up those many broken promises of 2008.
 
seamisty said:
Duped I so hope you are wrong!...
Click to expand...

So do I but ...

Ltd's most recent post links to a page that links to http://www.theaustralian.com.au/bus...argin-gains-over/story-e6frg9if-1225942441984

"The ACCC, Treasury, the RBA and APRA all approved Westpac and CBA's recent acquisitions, yet now say the big banks have too much power.

They should ask themselves who is to blame."


Compared to the smart money, our Federal institutions seem to be a gormless rabble with an incoherent message. An easy barrier to get through or worse, manipulate, to get to our wallets. With the judiciary, rightly or wrongly, not stepping in to pick up the slack.

Like in the Octaviar decision by the High Court.
The Corp Act (created and policed by our Commonwealth institutions) creates a right of priority in exchange for lodging a notice with, among other info, “a short description of the liability (whether present or prospective) secured by the charge” and “a short description of the property charged”. So that, more or less in the High Court's words, “a person minded to search the register would be informed … of the need to look elsewhere to ascertain the precise nature and details of the liability or liabilities secured”.

But Octaviar was out there telling the world that the YVE loan WASN'T covered by the charge. And I haven't seen any evidence of Fortress correcting erroneous public assertions made by Octaviar.



So how exactly, pray tell, was a creditor like me, supposed "to ascertain the precise nature and details of the liability or liabilities secured"? Anyone?



Somehow, our legal system, including the High Court, simply ignored this inconvenient reality.


Was the High Court's only option to throw this faulty law back, to its designers, the legislature, to fix. Could the High Court have done something about it?

Why wasn't estoppel a feature of the Octaviar decision? After all, we are talking about contracts between parties.



Sounds like a pretty clear application for estoppel to silly lay me. The transaction document could have been estopped in order to preserve a purposive construction of the Corp Act.

What makes the whole situation worse is the High Court even appears to have opened the door for estoppel at para 27: "and any terms which may be implied in fact". The facts are that Octaviar was telling the world that the YVE WASN'T covered by the charge. And where is it that Fortress publicly corrected this?



So why did the HC open the door AFTER the PTQ and Fortress have presented their cases? So the next combatants can run the argument? Why can't the PTQ in this case? What sort of judical process is that?
 
REJECT EXTENDED TAKEOVER OFFER
FOR PREMIUM INCOME FUND UNITS MADE BY ALF PIF FINANCE LIMITED
ALF PIF Finance Limited has lodged a Notice of Variation of Extension of its takeover offer, extending the
period of its bid from 29 October 2010 to 28 February 2011 (unless further extended).
Managing Director Jenny Hutson said ‘The offer continues to be 0.1 redeemable preference shares and 0.05
ordinary shares in the Bidder for each unit in the Premium Income Fund. The shares will be issued in a
Company with no trading history and less than $2000 in assets.
The offer is grossly inadequate. The proposal seeks to shift over $120 million in unitholders’ current value
to the Bidder’s current shareholders. The Wellington Capital board believes that the approach by the Bidder
is opportunistic and is at a price that does not reflect in any way the current value of Premium Income Fund
units.’
The Board of Wellington Capital recommend that all
Premium Income Fund unitholders REJECT the Bidder’s offer.
http://www.nsxa.com.au/ftp/news/021723362.PDF
 

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