IMPORTANT UPDATE
EGM CALL
An Extraordinary General Meeting (EGM) of all Premium Income Fund (PIF) investors is being called by the PIF Action Group on:
Time: 11.00 am (Eastern Standard Time) sign in commences at 10.00 am (arrive preferably at 10.00am)
Date: 16 June 2011
Place: SMC Conference and Function Centre, 66 Goulburn Street, Sydney, NSW ( Map:
http://www.whereis.com/ )
WHY CALL AN EGM - LATEST WELLINGTON BEHAVIOUR
On 6 May 2011, Wellington Capital Limited (Wellington) the responsible entity (RE) of the Premium Income Fund ARSN 090 687 577; NSX Code 'PIN' (the Fund) announced a placement of 113 million units at 10 cents to raise $11.3 million equal to 14.97% of units currently on issue. The Fund has approximately 10,500 investors located throughout Australia. In our view, in completing this raising Wellington is no longer acting in the best interests of all Unitholders.
We are concerned that:
* this behaviour by Wellington will have the effect of diluting the current value of investor units in the Fund even further.
* recent changes to the constitution, have removed the protection Members had against the sale of more units in the Fund at less than the reported value of the Fund’s net assets;
* Wellington propose to issue units at a discount of over 70% to reported net asset value
* it willl inevitably involve otherwise unnecessary costs of fundraising payable such as underwriting and legal fees
* Wellington does not now need to offer units pro rata to current Members, and has indicated nothing to them regarding the preservation of the extent of their collective current ownership of the Fund .
WHY CALL EGM - THE OBVIOUS
In the opinion of many of your fellow PIF Action Group members contacted and that of the PIF AG executive, Wellington Capital is considered NOT to be performing anywhere near as well as expected and promised. Over the last three years of Wellington management the fund continues to lose money and go backwards as follows:
* Losses of approx $34M 2009, $40M 2010 and $4M half year to Dec 2010 (not including April 1c payment)
* Unit value down to from 45c to 33c in the $1 - a 25% loss since Wellington Capital took over the Fund
* No 3c payment as promised by Dec 2008 - only a paltry 1c paid Oct 2010 and then April 2011 and two years too late
* No quarterly distributions
* Buyback Scheme of up to 37.75 million investor units at 45 cents per unit to occur by 18 September 2009 did not happen
* Continued write downs of our PIF assets
* Wellington appears to now be mortgagee in possession of most properties or having appointed Receivers & Managers, which indicates most properties are in loan default
Lack of transparency (IAC vote count not given, $5M loan provider at 25% interest, legal actions against fund, etc)
* NSX listing currently trading at around 8.8c poor value - indicating a trader perception of PIF fund value of only $66M
* It appears that Wellington is liquidating the funds physical assets with little sign of the targeted restoration of fund in 3 to 5 years
In short, serious declining asset value with only 2% of our own money returned to investors over the entire time of Wellington management to date, when upward movement was expected. Simply put, we are not satisfied with Wellington's management. Nobody can accuse our Action Group of not giving Wellington a fair go. We feel they have had more than a fair go!
Our investments in the PIF must not be allowed to continue in it's documented downward spiral, accordingly, we are calling an EGM in an attempt to remove Wellington Capital as RE and replace them with a genuine alternative RE manager provided by the PIF AG
CASTLEREAGH CAPITAL LIMITED "THE GENUINE ALTERNATIVE FOUND"
Over a period of time your AG Senior Executives have liaised with the management of an Australia wide company called BRI Ferrier Limited, with conferences, meetings, teleconference hook ups, phone calls, emails, power point presentations, etc. In addition AG executives and Castlereagh management met with or communicated with, our class action lawyer and barrister, substantial PIF unitholders (AG and non AG), IMF Aust., ASIC (within their advisory role), professional observers, etc. Most meetings were conducted at BRI Ferrier's Sydney office.
We feel that BRI Ferrier is a well-known, established, company that has been around for a long time and know what they are doing. We have got to know them and the way they do business and we feel comfortable with them. We observed them to be professional, successful, ethical and loyal.
BRI Ferrier have a subsidiary fund management service called, Castlereagh Capital Limited, named after their address based at 1 Castlereagh Street Sydney. Castlereagh Capital Limited is a licensed Fund Manager, Responsible Entity (RE), ACN 140 979 273.
Castlereagh Capital senior Executives and Board Members have significant experience in operating distressed and non-distressed mortgage and property portfolios. Castlereagh's parent, BRI Ferrier, has more than 125 employees Australia wide with over 40 years experience and offices located in Sydney, Adelaide, Perth, Brisbane and North Queensland.
In addition to Castlereagh's Fund's Management service, BRI's services also include:
Business reconstruction
Bankruptcy
Forensic accounting
Corporate insolvency
Property insolvency
and Castlereagh Capital has access to the same assets, wisdom, experience, knowledge, valuable business contacts and services spread out across the country where our PIF assets are located
Your AG Executives are concerned that after continual PIF losses and write downs, that assets in the fund are in a distressed state and that Castlereagh Capital being specialised in this area are better equipped to deal with this serious concern
Castlereagh Capital Web Site:
http://www.cascap.com.au/
(Castlereagh Parent) BRI Ferrier Web Site:
http://www.briferrier.com.au/pages/welcome.php
DO WE HAVE THE EGM NUMBERS
Corporate law requires that holding an EGM requires 5% or more of the entire units of the fund. This would require the AG to have the support of at least 38 million units from PIF investors and the requirement of those unit to have returned their written "Authorizations for EGM Power of Attorney" back to us
It is greatly satisfying to advise members that your AG have achieved more than double the amount required above. A huge thank you and deep appreciation to all those PIF investors that we approached and who then gave their enthusiastic support with their signed, returned, written Authorisation for EGM
CASTLEREAGH MEMORANDUM IN MAIL THE GENUINE MAIL KIT
Castlereagh Capital have sent an Explanatory Memorandum [EM] kit, which is now in the mail going out to all 10,700 PIF investors. We do not wish to replicate the Castlereagh Explanatory Memorandum package in this update, so we ask members to carefully read it when it arrives in the mail to you.
We strongly recommend you to vote "FOR" all the seven resolutions proposed in the Explanatory Memorandum after receiving and reading the document.
Over the next week please look out for the Castlereagh Memorandum Kit to come in the mail. The first item you should see when you open the Castlereagh Memorandum is a cover letter from the PIF AG. Some investors have been receiving letters from ALF PIF so please do not confuse it with this genuine Castlereagh Kit .
There have been some scurrilous comments in the media that our PIF AG or Castlereagh may be aligned with ALF PIF. We state that both the PIF AG and Castlereagh have NO association with ALF PIF and any assertion that the groups are working together are completely FALSE.