Wellington Capital PIF/Octaviar (MFS) PIF

Re: Octaviar MFS Premium Income Fund PIF

Hi All,

Just returned from the investor forum with the glossy handout (attached). The first hour was a powerpoint presentation with background on Jenny/WC and the history of the PIF. Investors were then given the floor for Q&A.

We will post our observations and the answers to our questions later today.

Regs,
Boots

Re: Octaviar MFS Premium Income Fund PIF

Hi All,

The meeting is probably still going. I had to leave at 2pm which was unfortunate. Will write up as much as I can later and post. If you plan to meet at the forum, you should meet before hand as the question time could go on forever and there aren't many people left 4 hours into it.

It was pretty frustrating. Good questions were asked but I felt a lot of the time they weren't answered properly and then the microphone was gone and the next question is asked.

I think Jenny will stay till every question is asked.

There really wasn't any change from what Breaker1 reported in his meeting with Jenny. One thing tho is that we will be asked to vote in August on the following:
Stay with the current RE and their direction for the fund OR
Liquidate

If we stay with CW it means, the fund will be listed on the NSX and this will be the only way you can 'redeem' your units. It would mean all current redemption requests will be binned. It will be a vote where they need 75% to liquidate. Your voting power will be determined by the number of units you hold.

They plan to pay out 6c per unit this financial year min and this will probably all be capital due to the fact that the fund is making a loss.

More coming when I get time on the computer….

Re: Octaviar MFS Premium Income Fund PIF

DoraNBoots said:

Hi All,

The meeting is probably still going. I had to leave at 2pm which was unfortunate. Will write up as much as I can later and post. If you plan to meet at the forum, you should meet before hand as the question time could go on forever and there aren't many people left 4 hours into it.

It was pretty frustrating. Good questions were asked but I felt a lot of the time they weren't answered properly and then the microphone was gone and the next question is asked.

I think Jenny will stay till every question is asked.

There really wasn't any change from what Breaker1 reported in his meeting with Jenny. One thing tho is that we will be asked to vote in August on the following:
Stay with the current RE and their direction for the fund OR
Liquidate

If we stay with CW it means, the fund will be listed on the NSX and this will be the only way you can 'redeem' your units. It would mean all current redemption requests will be binned. It will be a vote where they need 75% to liquidate. Your voting power will be determined by the number of units you hold.

They plan to pay out 6c per unit this financial year min and this will probably all be capital due to the fact that the fund is making a loss.

More coming when I get time on the computer….

Click to expand...

So I take it, that if we don't "redeem" via the NSX that we get a drip feed of our own capital over 5 years (each qtr?) till whats our's is paid back, is that it?

Did Jenny discriminate between the terms distribution and drip feeding of redemptions?

On distributions I take it, it will be our capital at first? If so, when will it be from PIF profit?

Great job so far Dora - thanks for getting back so quick.

Re: Octaviar MFS Premium Income Fund PIF

Yvette - thanks for the PDS. I have been reading the material on the Octavier web site, and wonder whether any of the members of this forum can help me out with some of the initial queries I have:

(i) It appears that the bank called in the loan because an interest payment was missed. Does anyone know the circumstances of this (i.e. how many interest payments were missed before the loan was called in, when were they missed, and why ?)

(ii) Is the loan to the bank secured, and if so, what specifically is the security ?

(iii) Has anyone provided a guarantee with respect to the payment of the loan to the bank ?

(iv) There is no mention on the web site about efforts to refinance the loan (the loan which was called in by the bank). Perhaps the Trust was not viable at that stage (which would explain why the bank called in the loan). Just wondering what anyone knows about this.

(v) Has anyone done any research to determine specifically when (and why) the Trust first ran into trouble with its operations ?

Re: Octaviar MFS Premium Income Fund PIF

Thanks doraNboots, Well at 12cents per unit I don't consider liquidation of the PIF is an option. I would definitely like clarification of where the distribution will be coming from, capital or income.Also the flier states 3cents per unit before xmas, I think that is a total not 3centsX2. I hope I am wrong. The way I read it the distributions will be from profit, not capital. Seamisty

Re: Octaviar MFS Premium Income Fund PIF

Sorry this is rushed and stll more to come when I get my arms free..

You have doubled the money that you now manage at WC. Do you think you will cope? I ensure I hire the best people to ensure we do a good job. Went on to mention her values.

Are you pursuing people like Guy for PI? As a group they only have $20mill PI that could be pursued and this is a tiny amount in relation to the fund. Dora: I find this kind of answer very frustrating. She didn’t answer the question but it indicates to me the answer is no. I think every cent should be pursued; $20mill should not be scoffed at!

Will we get $65 mill from LLA? Jenny has negotiated with Packers’ boys the following: $10mil in July plus $35mil over time. Some of this $35 mil will be generating interest immediately and some won’t generate interest for 1 year (but a higher rate of interest).

Why did PWC refuse to value the units in the fund and how can we get an independent valuation of our units? Why PCW refused was not answered. 333 Capital were involved in helping the board determine the unit price. (I’m told these guys are a subsidiary of a major liquidator)

Example of why the loans to MFS are worth nothing. Money was leant to Sheraton in North QLD. If they were to sell the Sheraton there would be no money to pay the PIF.

Why was Guy working for you up until Friday and do you think he is incompetent? The answer was basically saying to assist with the transition. Jenny said he was good to work with during the transition.

What will your management fees be? Once distributions start WC will take 0.7c. I think she said this is 25% less than MFS were taking.

All PIF staff are now employed by WC. The only people they retained from before are: Steven Heart, Chrisy Molsworth, Tom Griffith and Jason Chan.

Jenny said 6 entities were approached to put in offers to be RE. The board decided WC should be given the option to take it. No mention of who the other 6 were or what they could have offered. During morning tea, one WC staff members said they were vultures or had nothing to offer.

Re: Octaviar MFS Premium Income Fund PIF

The distributions had better be from profit and not capital.

Also did they offer any explanation as to how the Fund went from a "carrying value" in May08 of 691 mill to a "realisable value" of 413 mill in the same month (information supplied on flier 2)

Re: Octaviar MFS Premium Income Fund PIF

breaker1 said:

So I take it, that if we don't "redeem" via the NSX that we get a drip feed of our own capital over 5 years (each qtr?) till whats our's is paid back, is that it?

Did Jenny discriminate between the terms distribution and drip feeding of redemptions?

On distributions I take it, it will be our capital at first? If so, when will it be from PIF profit?

Great job so far Dora - thanks for getting back so quick.

Click to expand...

I think the drip feed of our capital is only until the fund is making decent returns again. She wants to ensure we get some quarterly distributions and as there is no profit at the moment it has to come out of capital. She didn't say when she expects the fund to be making a profit but she does see we will need 3 to 5 years to get back on track.

Jenny did say they will be redeeming hardship claims. Apparently there are a lot and every one of them will be considered.

Re: Octaviar MFS Premium Income Fund PIF

Hi Dora

Like breaker said, great work so far, most appreciated, although the information is a little frustrating but expected.

How do they expect us to receive the idea of having distributions paid from capital. I assume this reduces our stake in the fund and therefore we are just living off our capital as we have done for months and not receiving any interest at all

Does the fund have any profit generating investments? and why should WC be paid a management fee when we aren't getting real distributions. If JH has so much faith in rebuilding the fund maybe she should pay herself some management fees out of her capital and see how she likes it

Re: Octaviar MFS Premium Income Fund PIF

Dora

Any mention of valuation for Centrelink purposes??

Cheers

Re: Octaviar MFS Premium Income Fund PIF

Rocky1 said:

Hi Dora

Like breaker said, great work so far, most appreciated, although the information is a little frustrating but expected.

How do they expect us to receive the idea of having distributions paid from capital. I assume this reduces our stake in the fund and therefore we are just living off our capital as we have done for months and not receiving any interest at all

Does the fund have any profit generating investments? and why should WC be paid a management fee when we aren't getting real distributions. If JH has so much faith in rebuilding the fund maybe she should pay herself some management fees out of her capital and see how she likes it

Click to expand...

Can you ask tomorrow if management fees will start when capital distributions or real distributions start? I'm assuming it's when capital distributions start but could be wrong.

Jenny said that she was paid something like $750,000 by MFS to cover management costs. She said they (MFS) used to spend this much per month to manage the fund.

Why list on the NSX and not the ASX? Costs are a lot less and we would be a big fish in a small pond (same answer as in Breakers interview). There are only 15 stockbrokers but some are very large brokers.

Do you think the NSX listing leaves the fund open for some big investor to snap up a huge amount of units at a ridiculous price thus allowing them to take over the fund? You can’t control the market. Jenny admits the NSX is just for the desperate. She says it’s for emergency cases that must redeem.

One young guy had a good question that maybe someone else can elaborate on. He was reading something that said MFS related people have 60mil units. Jenny said she didn’t know about this and would look into it. I think one of our AG members had the same document so hopefully can post regarding this. She did say that the top 20 investors in the fund were not MFS related.

Jenny's comments regarding the bad loans involving MFS were annoying. She seems not to blame the RE at the time but the parent company as the RE just handed over the money and it was MFS who gave back the rubbish loans!

I will put all my comments in one attachment and post later...

Re: Octaviar MFS Premium Income Fund PIF

iamspeed said:

Dora

Any mention of valuation for Centrelink purposes??

Cheers

Click to expand...

Jenny has sent a letter to centrelink advising of the new unit value.

Re: Octaviar MFS Premium Income Fund PIF

Rocky1 said:

The distributions had better be from profit and not capital.

Also did they offer any explanation as to how the Fund went from a "carrying value" in May08 of 691 mill to a "realisable value" of 413 mill in the same month (information supplied on flier 2)

Click to expand...

Rocky

The carrying value of a loan would be the initial loan amount, say you lent $10mill but if you think you are only going to get paid back $5mill, that $5mill becomes the realisable value. You could actually get more than the $5mill - it is just a guestimate at the point in time.

The $691mill has been lent but WC only expect to get back $413mill. No one event has happened overnight to drop the value, it has just been a result of WC going through the books and placing a value on things with the assistance of 333 Capital.

If JH thinks she can get this thing back to $1 per unit, she is going to have to get the realsiable value back towards the carrying value. Maybe given time borrowers have a better chance of repaying or if she takes posession of property she has a better chance of selling that at a value to recoup the full loan amount. Also given time she will be able to claim on some of the Lloyds insurance. Plus she gets some $ out of Octaviar.

We can only hope!

Re: Octaviar MFS Premium Income Fund PIF

Thanks again, Dora. We won't shoot the messenger! It all sounds rather familiar and disappointing. Our capital will just run down eventually to zero if no income starts to be generated. I'm looking forward to a legal opinion regarding any other options available, but I think we're in a corner.

Re: Octaviar MFS Premium Income Fund PIF

Rocky1 said:

The distributions had better be from profit and not capital.

Also did they offer any explanation as to how the Fund went from a "carrying value" in May08 of 691 mill to a "realisable value" of 413 mill in the same month (information supplied on flier 2)

Click to expand...

that should have been 341 mill realisable value

Re: Octaviar MFS Premium Income Fund PIF

JH confirmed today that Hutchings is no longer involved with PIF. I agree with her comment that it added value to keep him on til now [My words not JH's].

Apart from that don't forget the saying: Keep your friends close, you're enemies even closer.

Don't sentence Hutchings yet, I suspect his worst crime was being a yes man to King and Peacock.

RE the NSX listing application: probably can always be withdrawn. If so, from a project management perspective, it's good to get the application in asap. JH noted that under AU law something has to be in place by the end of the 360 days (March 09) or liquidation will proceed. March 09 really not far away.

Many Q's were about the NSX listing & JH voiced that WC will look at other options. I wasn't convinced at first. Someone raised the fear of a take over if the NSX price is at too much of a discount. At the very end someone asked about the option of current holders buying the units that anyone else wants to sell [Like an off market auction]. She was quite engaged in discussion about such an alternative. So maybe the NSX is not the only option WC will look into. [But time is tight.] I think she was surprised by the support she's getting from us. Others asked if it would help WC if we withdrew redemptions. Believe it or not redemptions are still only for 1/2 of the fund.

You'd think we'd be once bitten twice shy but the general mood seems to be one of taking the leap of faith with WC.

Meeting finished at 2pm. About 3hrs of questioning.

Hope I got my notes right. RBOS debt is down to $45M. Under the deal it has to be paid by (end of?) August. The debt facility between PIF and RBOS has been there a while and was rapidly and fully drawn in Nov/Dec 07. [I would use the word RAIDED]

The RE requested the $50M debt facility in February. Still outstanding. If it is paid (all or in part) it will be distributed to unit holders. The $50M is NOT included in the 65/45/14 valuations.

The 45c is based on a valuation of $413.7M and doesn't include the $147.5 PIF is seeking from OCV. 65c valuation doesn't include the $50M.

WC opinion is that all OCV creditors are equal. (There was a question about the tax office having seniority which to me didn't seem to be definitively answered). If all creditors are treated equally PIF would get a 1/5 of the OCV remnants. (By my calcs we're looking at getting less than 1/2 of the $147.7+$50M. -don't quote me on that)

JH voiced that the days of financial engineering are over. [Good to hear.]

Liquid assets have already been realised. PIF is mortgagee in posession on some properties. PIF has very big exposures to a very few positions. 37 loans which JH knows in intimate detail. We have to ride out the cycle.

WC will be seeking to re introduce the 0.7% management fee. Can some one ask at the next forum if the surplus profit clause that was introduced in 2006 will be removed. I expect so but want to be sure. I expect so because JH talked about growing the value of units AND paying distributions.

Q: for the 65c valuation where has the 35c gone.
A: market movements

PIF RE staff are all now employed by WC. Only 4 came across from the old RE. JH noted some names and responsibilities and they all sounded like operational/back office roles. So that seems OK.

WC promise 3c by Christmas +3c end of financial? year per unit. (Can someone confirm I heard right?). But it will be return of capital, NOT interest/distribution. At a valuation of 45c or even 65c per unit, 6c in a year is a sizeable precentage.

The 10 days between black friday and when PIF was frozen: JH opinion is that there was nothing unusual in the redemptions.

In last week of April Peacock asked 6 entities "to put their best offer forward" and then decided on WC after fast process.

August: WC need 75% of the votes cast.

WC have written to CentreLink. [Maybe they'll find time after lunch on the $250K BBQ at parliament house and 4.51 home time to read it. Any suspicions I had that our Elected Officials won't lift a finger for self funded retires was re-inforced today. It's an absolute abomination that Centrelink has taken such a hard line and not provide relief in this instance. I'd be embarrassed to work for the Centrelink.] I think I heard right that WC might add their voice to an appeal for help to ASIC. JH made it clear she is only pursuing legal action that will give a good return to the fund. [Good to hear.] Professional Indemnity insurance of the former directors is only worth $20M and would only yield 1c per unit. [There are lower hanging fruit.]. Retribution will be up to unit holders to pursue through e.g ASIC. [Fair enough] So give ASIC a call.

Re: Octaviar MFS Premium Income Fund PIF

Rocky1 said:

The distributions had better be from profit and not capital.

Also did they offer any explanation as to how the Fund went from a "carrying value" in May08 of 691 mill to a "realisable value" of 413 mill in the same month (information supplied on flier 2)

Click to expand...

It seems as though the distributions will have to be initially from capital as there is no profit, how long this goes on for is my concern.
The losses shown from 691m to 413m seem huge to me and the main areas are in alternative investments 267m to 96m and other managed investment units 93m to 5m. How on earth anyone could lose 90% in investment units in that period of time is beyond me, when the worst market falls in property has only been 20%.
We still need to pursue the people responsible for this total disaster and make sure they are brought to account.

Re: Octaviar MFS Premium Income Fund PIF

DoraNBoots said:

Jenny has sent a letter to centrelink advising of the new unit value.

Click to expand...

Jenny should also advise Centrelink that there will be no backdated interest payment for PIF investors by WC to when most distributiond had ceased, which was at least 11/02/07.

Jenny should strongly advise C/L that accordingly, there should be a backdated C/L payment to all those PIF, aged and disabled pensioners, who have had their income based pensions incorrectly deemed at a higher value than they were/are actually getting. The backdated period should be from when the new unit value kicks in with C/L, back to at least 11/02/07.

There should also be a similar backdated C/L consideration for those PIF pensioners on asset based C/L payments.

Re: Octaviar MFS Premium Income Fund PIF

Dear Fellow Action Group members

And Hi Dora it was a pleasure to meet you and other Action group members in person

Well it was the Jenny Hutson show and of course, She is a wonderfully kind and caring person

You get 30 minutes complete with video footage of her accomplishments and pre arranged questions and answers accompanied with half time tea and bickies

Followed by questions and answers

My evaluation is that it is going to be very hard to battle against this sort of group propaganda and brainwashing . She is good ;Very good, may even be related to Joseph Goeballs who did all the Hitler indoctrination rallies ,poor naive investors are totally unaware their may be other options . BECAUSE she doesn’t GIVE ANY

Action group members are going to have to steel themselves to this honey trap and go for her throat as I did on the NSX which I am positive is her week point

I have just found out there were 428 trades this Calendar Year on the NSX which averages at 3.5 trades a day AND SHE CALLS THAT PROVIDING LIQUIDITY


Well I did my best for you dear friends , and gave her a hell of serve , in the short time span I had ,and I think she was rattled, was basically unable to answer with any logical reason for the listing ( I suppose if I had really wanted to be nasty I could have mentioned their may have been a certain type of nepotism involved) You hear a lot of strange stories on the internet


Unfortunately unless we find some way of legally getting hold of the books and finding out what our assets are really worth before August NSX listing vote . I do not think we have a snowballs chance in hell of stopping her plans for the Fund

Re: Octaviar MFS Premium Income Fund PIF

breaker1 said:

Jenny should also advise Centrelink that there will be no backdated interest payment for PIF investors by WC to when most distributiond had ceased, which was at least 11/02/07.

Jenny should strongly advise C/L that accordingly, there should be a backdated C/L payment to all those PIF, aged and disabled pensioners, who have had their income based pensions incorrectly deemed at a higher value than they were/are actually getting. The backdated period should be from when the new unit value kicks in with C/L, back to at least 11/02/07.

There should also be a similar backdated C/L consideration for those PIF pensioners on asset based C/L payments.

Click to expand...

Sorry, dates above should be, backdated to 11/02/08 not /07 - well, it's worth a try!