Re: Octaviar MFS Premium Income Fund PIF
My thoughts on the Melbourne Forum
We will receive in TOTAL a 3c "distribution" by Christmas. This "distribution" will be paid from capital. I couldn't quite understand exactly where the capital was coming from but when I asked this she kept mentioning "there are a lot of losses in the bottom line at the moment". Although the distributions will be from capital it will not reduce the number of units we hold. This type of distribution is likely to continue for some time. Distributions will be quarterly starting in 09. It is also likely that these distributions will be mostly non taxable (WC will provide us an explanation of how the distribution was funded to show to our accountants)
Most investors seemed to be leaning towards the option of leaving there money in the fund for JHs proposed 3-5 years in the hope she can return our $1 value. I guess most people are thinking if we liquidate they will get 14 cents (although I find this hard to believe), or they can sell via the NSX (if buyers present). If JH is able to restore $1 unit value then based on 5 years this a better return than taking 14 cents or 45 cents and reinvesting that money. I believe that she will make up certain ground through recovery from OCV (the 147.5 mill) and the realisation of true capital value (at the moment I think the 45 cents is based on deflated values).
I also asked her to provide us with more transparent figures on the state of the fund, e.g loan A is for $ at % and is secured or unsecured and the valuation of assets versus likely return when the economy recovers. She said she would provide this information in the next update.
I also asked her if the NSX would be the only way of redeeming our money in five years time and she said that it could be an evolving process where other options (e.g ASX) may become an alternative vehicle
Jenny also mentioned that she would look into unit trading between current holders and the possibility of an AG rep sitting on the board
Personally my gut feel is that JH will restore value to the PIF, maybe not a 1$, but hopefully close to it and waiting for this is better than the current alternative. For this to happen though we need to vote for her plan NOT liquidation.
Having said this though I would like to look at the option of other RE's. We are running out of time and if we wish to pursue this path need to get moving. As such we need to get to get our structure and POA happening. Whether we use this in the immediate future or not this structure will give us power moving forward and give us a way of keeping the RE more honest
TUART - why couldn't you talk to "YOUR" people and in a confidential manner present us with a summary of what they are prepared to offer via this forum.
I haven't read back through all this so I hope it makes sense.....my son wants me to play trains. I will post more later if I think of anything
Hi all,
was an interesting meeting in Melbourne, considering the emotion and anger in the room of investors, it went very well and the proposals put forward appeared on the face of it to be fair.
However further investigation is warranted as in previous comments made by other members on this forum.
The August meeting proposed which will allow votes by unitholders either in person or by PROXY will allow the fund to continue as a going concern with the current RE being WC or to liquidate fund and return investors cash by March2009 at the suggested realisable value of 14c...
If we voted to continue as a going concern, we still have the ability to pursue an alternate RE at any point in time onwards and then itwould be put to a vote at an extrordinary meeting that can be called by the minimum 100 unitholders of those that hold up to 5% of fund as previously mentioned by someone here on forum. At least the going concern option allows us more time to look at any alternate strategy and also see how WC performs for us unitholders.
Am currently exploring some options for us to consider and will put forward on the forum once I have got ideas together, the NSX listing may provide unitholders with the ability to purchase other unitholders holdings ( for those who want to exist the fund now at whatever price is offered eg 14c - 45c or less depending on what is offered on the NSX) if Jenny is proposing an annualised return of 6% on our original $1 unit value then the return to an investor buying units at 14c - 45c is spectacular, it equates to around 13.3% on 45c unit purchase price to 42.8% for 14c purchase price.
Not good for those wanting to sell but at least those wanting to stay in the fund it may be beneficial.
JH also mentioned the possibility of a
special distribution that may be paid to unitholders before June 2009 depending on the success to recover loans due in that time and how much cash is sitting in the bank account. This then improves the return to investors significantly again.
NSX listing may also provide opportunity (again depending on the price being offered to purchase at) to sell some, part or all of your units, take say 45c assuming best price offered and invest this into quality stocks on the ASX since banks are presently providing dividends of up to 7% or more plus the franking credit which gives investors a potential gross return of anywhere between 9-11% paid 6 monthly.
Then you can benefit form the recovery in the share price of the ASXstocks over a 3-5 year period which may appear to be more plausible given the history of the financials and banks and their underpinned security with the RBA ( reserve bank) and the stocks are more liquid on the ASX.
These are just some of the things running around in my head as possible options to consider and choose.
Some investors may be much more comfortable having their exposure and chance of recovery with the banks than with WC.. plus on the price that the sotck are currently being traded at they appear to be very attractive for yield currently and for us investors possible a more guaranteed hope of recovery.
From a vulture fund point of view, if investors in the early period choose to offer their stock on the NSW for sale and then accept ridiculously cheap offers below the Net Asset Backing then those that buy the stocks will pick up a very handing return indeed.
Problem is not everyone still has the spare cash to do this given their funds are tied up in the PIF units.
JH read out some investors letters sent to her today regarding their financial hardship and dire position, it was very hard to listen to them and not feel for them and I am sure there are those in this forum that may be in the same position so I am not trying to take away the significance of your own circumstances however I hope that they do NOT act too quickly in taking the easy way out of selling out at any price.
Back to you soon
Cheers Goldfinger