Wellington Capital PIF/Octaviar (MFS) PIF

There is an article in todays AFR by Ben Wilmot in relation to the PIF which I am unable to copy.

In the content of the article Jenny Hutson is quoted as saying "I have had investors speak to me today indicating that they've been contacted by ALF PIF recently and have been told that ALF PIF has arranged for Bri Ferrier to be licensed and that they're working together to take over the fund."

Who are these lucky investors that can speak directly with Ms Hutson? We are lucky to even get to speak personally with a hot line attendant!! Desperate measures Jenny but not surprising since your credibility is already tarnished.

Further on the article states 'Bri Ferrier, Castlereagh Capital and Pif Action Group stated that they "have no association with ALF and any assertion that the groups are working together is false and misleading" Mr Byrnes said "We are not working with them"

I see Cookie has posted the article. Thanks Cookie.

Seamisty

Cookie1 said:

An article entitled "Ferrier backs PIF Rescue Bid" that appears in the Australian Financial Review today 10/5/11 is attached. Interesting reading.

Click to expand...

Cookie1. Can you access these AFR articles as well:

http://afr.com/p/business/property/wellington_capital_to_raise_to_finish_sIuN2iUGVoDQaJcoKB7mII

http://afr.com/p/business/property/three_hotels_on_market_O3FjPNzEXpqrEkJA7xiwhO

Wellington no longer acting in our
interest
PropertyReview.com.au
10/05/2011 00:37:00
A LARGE group of disgruntled
unitholders has called on
regulators ASIC and the NSX to
stop a planned capital raising
by Jenny Hutson’s Wellington
Capital for the Premium
Income Fund.
Hutson took over control of PIF in
May 2008 from failed property
group Octaviar, formerly MFS,
despite concerns of a conflict of
interest due to the close relationship
between Hutson and Octaviar’s
executive Chris Scott, who was
reportedly running Octaviar and was part owner of Wellington Capital.
Hutson is Scott’s adviser, she was also chair of his company S8, and was his mouthpiece
during his war of words with Andrew Peacock. However she refuted all those conflict of
interests claims.
Wellington Capital is planning to issue 113 million units at 10 cents to raise $11.3 million,
which is equal to 14.97% of units currently on issue.
The PIF Action Group consists of around 27% of all unitholders in the fund. Vice president
Charles Hodges said investors are not being treated equally and has listed a number of
examples where they believe Wellington has breached its corporate and listing
PropertyReview.com.au - Australian Property Review full story here http://www.propertyreview.com.au/property-trusts/5319-Welli...

Duped said:

Cookie1. Can you access these AFR articles as well:

http://afr.com/p/business/property/wellington_capital_to_raise_to_finish_sIuN2iUGVoDQaJcoKB7mII

http://afr.com/p/business/property/three_hotels_on_market_O3FjPNzEXpqrEkJA7xiwhO

Click to expand...

Sorry, Duped; I can't access the articles as I don't have a subscription but need to go into town and will try to get copies at the library, scan and post them later. The other article was emailed to me. I'll try that source as well.

Cookie1

Well, it looks like Ms Hutson will be having a busy day at the office.

More Media Articles today from Sydney Morning Herald and Property Review as attached:

The SMH article is about the PIF but you have to get past the part on Equititrust.
"In a sign of the growing investor anger with struggling Queensland mortgage funds, Wellington Capital fces removal as manager of the MFS-founded Premium Income Fund (PIF) after it surprised investors on Friday with a capital raising priced at a vast discount to ts estimate of the fund's value...."
See complete article attached.

Property Review:
10/05/2011 00:37:00
Wellington no longer acting in our interest
PropertyReview.com.au

A LARGE group of disgruntled unitholders has called on regulators ASIC and the NSX to stop a planned capital raising by Jenny Hutson’s Wellington Capital for the Premium
Income Fund.

See article in full as attached.

Let's Limbo some more .. how low can you go?

Units on issue as at 5 May 2011 755,032,768 * $0.34/unit = $256.7m fund NTA before placement units.
Placement units 113,000,000 * $0.10 = $11.3m additional fund equity.
Total fund value after placement units = $256.7m + $11.3m = $268m / 868m = $0.309/unit
A reduction of $0.031 per unit for only $11.5m in equity is just madness (IMO).
I cannot see how the manger will be able to justify that the placement is in investors best interests.
If there ever has been a case for not listing a fund, your fund is disclosing it in spades.


This information has been brought to my attention by a member of your fund:-

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s708a.html
''........5) The sale offer does not need disclosure to investors under this Part if:
(a) the relevant securities are in a class of securities that were quoted securities at all times in the 3 months before the day on which the relevant securities were issued; and

(b) trading in that class of securities on a prescribed financial market on which they were quoted was not suspended for more than a total of 5 days during the shorter of the period during which the class of securities were quoted, and the period of 12 months before the day on which the relevant securities were issued; and

(c) no exemption under section 111AS or 111AT covered the body, or any person as director or auditor of the body, at any time during the relevant period referred to in paragraph (b); and

(d) no order under section 340 or 341 covered the body, or any person as director or auditor of the body, at any time during the relevant period referred to in paragraph (b); and

(e) either:

(i) if this section applies because of subsection (1)--the body gives the relevant market operator for the body a notice that complies with subsection (6) before the sale offer is made; or

(ii) if this section applies because of subsection (1A)--both the body, and the controller, give the relevant market operator for the body a notice that complies with subsection (6) before the sale offer is made. ......''

Can anyone tell me who Castlereagh Capital Limited is? Google is not giving me anything.

Is it a company simply set up by BRI Ferrier to wind down PIF and distribute the proceeds to investors?

Another NSX announcement.

Here's the link to the Deed Poll: http://www.wellcap.com.au/assets/pif/updates/2011/amendment%20to%20constitution_10%20may%202011.pdf

Prior to amendment the clause read:

3.2 The Issue Price of a Unit under the PDS shall be:
3.2.1 one dollar ($1.00) for the first Quarter of the Scheme;
3.2.2 thereafter, the Issue Price shall be one dollar ($1.00) per Unit unless
the Responsible Entity considers the total net value of all Scheme
Property, divided by the number of issued Units in the Scheme
('Variable Price') is less than one dollar and the Responsible Entity is
unable to access further funds under the MFS Support Mechanism to
increase the total net value of Scheme Property in which case the
Issue Price of the Unit shall be the Variable Price.

To

... and the Responsible Entity is unable to access further funds under the MFS Support Mechanism to increase the total net value of Scheme Property in which case the Issue Price of the Unit shall [sic] no less than the 90 day volume weighted average price on the National Stock Exchange.

I can't find a definition of 'Variable Price' in the constitution.

iamspeed said:

Can anyone tell me who Castlereagh Capital Limited is? Google is not giving me anything.

Is it a company simply set up by BRI Ferrier to wind down PIF and distribute the proceeds to investors?

Click to expand...

Castlereagh is a subsidiary of BriFerrier set up for sole purpose of acting as the RE of PIF if elected by members. The management has been interviewed many times by the executive members of the PIFAG and believe they are the most appropriate people to become the RE of our fund. Castlereagh Chairman, Mr. Ian Ferrier AO, has indicated that if appointed RE the team at Castlereagh would focus on reducing substantial discount to NTA (net tangible assets)of the fund and developing viable turnaround strategies for the assets with the fund. A complete imformation package will be forwarded to all unit holders very shortly. I recommmend the document be closely read by all.

ASICK. I don't know how much you know about WC's management of PIF but up until Friday 6 May 2011 WC communicated its position that the NSX listing was just a convenient mechanism for Unit Holders to get out if they want to. So they could e.g. book a capital loss to offset against capital gains. It was WC's communicated position that voting for WC in 2008 was for the long hall. WC communicated comparatively nothing of its concern for the NSX price over the years. That all changed on Friday 6 May 2011.

And now WC has gone and added this backflip in its communicated position into the constitution. It shall be interesting to see what the watch puppy does. I expect little. Especially since the High Court's decision in Octaviar which could easily have given the green light for companies to hold contradictory positions between what they say in the market and what that write in documents registered with ASIC.

IMLO

And yes ASICK. Governance' weak immunity to the pathogens in the market place is killing us. It's probaby better for us market participants if the alien government do gooders invading the market place pack up and go home. They are ill equiped to cope with the complexity of the market.

Duped said:

Another NSX announcement.

Here's the link to the Deed Poll: http://www.wellcap.com.au/assets/pif/updates/2011/amendment%20to%20constitution_10%20may%202011.pdf

Prior to amendment the clause read:

3.2 The Issue Price of a Unit under the PDS shall be:
3.2.1 one dollar ($1.00) for the first Quarter of the Scheme;
3.2.2 thereafter, the Issue Price shall be one dollar ($1.00) per Unit unless
the Responsible Entity considers the total net value of all Scheme
Property, divided by the number of issued Units in the Scheme
('Variable Price') is less than one dollar and the Responsible Entity is
unable to access further funds under the MFS Support Mechanism to
increase the total net value of Scheme Property in which case the
Issue Price of the Unit shall be the Variable Price.

To

... and the Responsible Entity is unable to access further funds under the MFS Support Mechanism to increase the total net value of Scheme Property in which case the Issue Price of the Unit shall [sic] no less than the 90 day volume weighted average price on the National Stock Exchange.

I can't find a definition of 'Variable Price' in the constitution.

Click to expand...

The definition is in the amendment itself.

There is case law which prohibits such amendments in relation to redemptions, but since redemptions are not permitted in your fund, then such law is probably not applicable.

The manager is only permitted to make such a unilateral amendment if the amendment is not detrimental to investors' interests.

I'm sure your prospective manager will be looking very closely into these maters.

Let's not forget that, according to the Financial Standard, "Greg Medcalfe will take over from Tony D'Aloisio, who became ASIC chair on 13 May 2007 for a four-year term, which finished in May."

I think W.C. belately found out that the constitution needed to be amended in order to keep the fund raising effort on the rails. I also think the amendment is detrimental to existing investors' best interests because the issuance of more units of equal standing to existing units at a lower price will reduce the future equity of those existing units without any benefit to offset that reduction. Further, any proceeds of litigation paid into the fund will be shared amongst a larger number of units, thereby reducing the benefit to existing units.

But who will take on the case? ASIC .. hoho .. maybe your prospective manager?

Class Action update 10-May-2011 9:00 Directions Justice Perram Court Room 18A, Court No. 6, Level 6 Adjourned - Pre-Hearing

Wheres Nick Nichols from the Gold coast bulletin when we need a comment regarding the 10 cent unit rort from WC.
Maybe poor nick knows even his creative writing skill cant put a positive spin on
Jenny Hutson who single handedly is putting a wrecking ball through the PIF with her latest farce.

ASICK said:

The definition is in the amendment itself.

There is case law which prohibits such amendments in relation to redemptions, but since redemptions are not permitted in your fund, then such law is probably not applicable.

The manager is only permitted to make such a unilateral amendment if the amendment is not detrimental to investors' interests.

I'm sure your prospective manager will be looking very closely into these maters.

Click to expand...

Let me rephrase: I can't find a definition of 'Variable Price' elsewhere in the constitution

"The manager is only permitted to make such a unilateral amendment if the amendment is not detrimental to investors' interests." But if the manager does ... who's going to do something about it?

Whose to say that reducing the Issue Price is detrimental to investors interests? WC seems to have already put the arguments forth. WC is just blaming the market. I.e. the market has valued the units at around 8c (largely I believe through WC's own conduct) and hence dropping the Issue Price down to that level is, WC argues, not detrimental to unit holders. WC is saying that by doing so it can raise funds to sell assets to get a better outcome for unit holders. Well if WC had been selling assets and returning funds like it said it would 2 years ago then the market likely wouldn't have slammed the unit price in the first place.

Hutson was quoted in Gold Coast Bulletin on 17 March 2009 "She said PIF had begun a marketing campaign through agencies Jones Lang Lasalle, Ray White and Colliers to sell a number of properties over the next six weeks.
"Between them they're marketing 11 of the underlying security properties, which are in addition to those already in the market (such as) the Sheraton Mirage.
"Obviously we'd like to be realising assets quicker to make that distribution."
Wellington Capital is 'very motivated' on this score.

If you want to see the quality of the so called marketing campaign of 2009 then see my posts #5613, #5959 and #5367 on this thread.

What a joke.

Reality isn't what the law says, reality is what you can get away with.

Here are Hutson's words quoted in Kruger's article of 9 May 2011: "Wellington's managing director Jenny Hutson said a balance had to be found between the fund's asset value and the low price at which it had traded over the past year." ... ''We've looked at a range of options; this is the most accretive for investors,'' she said. Hutson is using the poor NSX price as the reason for this latest move.

That's what used car yards do isn't it. Talk down the market value of your asset before offering to do a deal? How much has WC's conduct contributed to PIF's poor performance on the NSX?

What's Hutson been doing for the last 2 years to support a higher price? Has WC set PIF up to fail?

zixo said:

Wheres Nick Nichols from the Gold coast bulletin when we need a comment regarding the 10 cent unit rort from WC.
Maybe poor nick knows even his creative writing skill cant put a positive spin on
Jenny Hutson who single handedly is putting a wrecking ball through the PIF with her latest farce.

Click to expand...

Easy too Zixo. Nichols can just reference the AFR's Hutson quote "I have had investors speak with me today indicating they've been contacted by ALF PIF recently and been told that ALF PIF has arranged for BRI Ferriers to be licensed and that they're working together to take over the fund" The AFR quoting Hutson quoting investors quoting Big Jim associated ALF PIF. Pure gold. My brother's aunt's niece's sister said ...

Yeah, perhaps Kylie Mole became a journo when she grew up.

Didn't we enact rumourtage laws in Australia?

charles36 said:

Castlereagh is a subsidiary of BriFerrier set up for sole purpose of acting as the RE of PIF if elected by members. The management has been interviewed many times by the executive members of the PIFAG and believe they are the most appropriate people to become the RE of our fund. Castlereagh Chairman, Mr. Ian Ferrier AO, has indicated that if appointed RE the team at Castlereagh would focus on reducing substantial discount to NTA (net tangible assets)of the fund and developing viable turnaround strategies for the assets with the fund. A complete imformation package will be forwarded to all unit holders very shortly. I recommmend the document be closely read by all.

Click to expand...

Thanks Charles36
Have they been briefed on our pain and suffering?? Gee they could buy themselves some brownie points if they jumped all over Jenny with regards to this placement and rights issue? Surely they are regulars in the halls of ASIC and should be able to get this looked at seriuosly?? I am sick of ASIC turning up to solve the crime, instead of preventing the crime in the first place!!!!!!!!!!!!!!!!!