Wellington Capital PIF/Octaviar (MFS) PIF

[goldfinger38]

Re: Octaviar MFS Premium Income Fund PIF

Goldfinger

Could you please inform members on this Forum if you are an unbiased Action Group Member or have any related party interests with Jenny Hutson or the National Stock Exchange( NSX)

Hi Jadel,

I am an investor as is my mother and have no related party interests with Jenny Hutson (Wellington Capital) or the National Stock Exchange.

 

[deano1]

Re: Octaviar MFS Premium Income Fund PIF

hi there - hoping someone can help me out here - in the investor update July 2008 posted on the Wellington website there is a balance sheet setting out the various Asset classes - i sort of get the numbers associated with cash and Cash equivalents of 16mil, Mortgage loans of 351 mill ( would really like to understand these in detail but not really my major concern)- what i'd like some help on is - what is represented by the 307 mill under alternative investments - units in managed investment schemes 160 mill - fixed income securities 117 mill and my alltime favourite of lazy accountants other ? 14 mill - last time i looked 14 mill didn't qualify as other with the mess that PIF is - now i'm sure there has been some clarification on some of these with all the discussion on this topic so far so if someone could point me in the right direction i'd be greatful - my mother and younger brother have money caught up in all this mess and i'd like to be able to explain to them the actual assets that represent these numbers so i can make an assessment of the assets myself - thanks

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

Hi all,

The sydney Forum meeting went well. I'd like to thank all those who helped distribute flyers. Many people were very interested in gathering more information and were also interested if we could as a combined group make a complaint to ASIC.

Many of the questions were repeats of what was asked at previous meetings.

One question which was asked by JH was "Do Investors want a NSX listing of their units"? - with a show of hands sydneysiders overwhelmingly said they didnt.

To my surprise The forum group in melbourne was asked the same question and Investors said they would prefer a NSX listing.


Can someone from our melbourne group clarify this as it seems to be the polar opposite to the sentiment felt in sydney in regards to the NSX

Cheers

Zixo,

You did a great job on behalf of the Sydney AG!

Thanks for the feedback on the show of hands against the NSX, being inthe overwhelming majority. Jenny said, she would not do what investors did not want.

Thanks also to those AG who helped Zixo - thanks for stepping out folks.

 

[goldfinger38]

Re: Octaviar MFS Premium Income Fund PIF

Hi all,

One question which was asked by JH was "Do Investors want a NSX listing of their units"? - with a show of hands sydneysiders overwhelmingly said they didnt.

To my surprise The forum group in melbourne was asked the same question and Investors said they would prefer a NSX listing.


Can someone from our melbourne group clarify this as it seems to be the polar opposite to the sentiment felt in sydney in regards to the NSX

Cheers

Hi Zixo,

I was at the Melbourne meeting and yes it appeared that the show of hands in Melbourne were happy to consider a listing on the NSX as it was explained it was a vehicle to allow those who wanted to exit the fund to do so as the sale of those units did not deplete diminish the actual assets held in PIF.

Although as mentioned earlier by Jadel, if you have unitholders purchasing units at a significant discount to our $1 and there are motions in the future that need to be voted on, they may not be in favour of some resolutions considering they may be getting paid a very handsome return on their investment. Still it is a vehicle that allows those who vote to liquidate to get their money as they want. Please refer to my earlier quote on page 40 about possible plausible strategies where the NSX listing may provide some possible strategies to be considered if the buyer offer price was reasonable.

 

[Mutchy]

Re: Octaviar MFS Premium Income Fund PIF

Hello All.
Sydney meeting report:
Contacts in AG and AG meeting.
It was nice to meet AG people Javier, the solicitor, Jillian, Steve, Alan, and some of the WC staff: faces to names. I apologise for not being able to stay and talk after the meeting as one of my Wollongong group had an appointment elsewhere in the city. The lunchtime discussion was most enlightening, especially the explanation of which sort of formal organisation is appropriate for the AG. More later on that, but I think AG meetings would be desirable after we have digested the forum information.
AFR Article
I met and spoke at short length to the deputy property editor of the Australian Financial Review. He is going to publish an article which will probably appear in Saturday's edition.
General Observations.
As the forums are held more details are being divulged and in the next few days we will get an even fuller picture of what our present situation is and what the future holds. Reality is quite sobering on some issues!
JH IMHO is best described as a white knight than a grave robber. She and her staff have the right attitude.
Whilst handing out flyers I felt that many, many of the people present appear not to be computer literate. We of the AG have a problem that if we need to communicate with these people it will have to be by snail mail. Jillian suggested also that a hot line phone number may be appropriate for these people. I have no idea how to set up and communicate an AG hot line phone number. WC have a hot line phone number. Maybe WC could direct any AG enquiries to those of us in each geographic area who may volunteer to be AG phone contacts.
JH did not see that it was WC role, at present, to pursue individuals for potentially fraudulent or illegal behaviour. WC have their hands full and have been very busy over the last eight weeks. ASIC have that responsibility and WC will fully support any and all actions taken by the AG in representations to ASIC for the purpose of bringing justice to bear. WC have given the necessary notices to the PI and Officers Insurance companies with respect to claims under the policies for alleged breaches of the law.
I handed my list of questions to Caroline - one of WC staff and she immediately passed it on to the MC. Whilst they were all answered in the general question time in sometimes circuitous ways, I was assured that the WC website will answer not only my written questions but all the written questions they receive, in detail and in about two weeks.
There have been changes over the years to the PDS which have altered, for example, the nature of the PIF from a capital guaranteed fund to a fund supported by the $50 Million MFS/Octaviar support facility, and these changes have escaped the notice of many unit holders, so that the fund many thought that they invested in is not now the same. I sensed some disillusionment among questioners on the nature of the security of their capital.
The PIF does have a Construction Loss Insurance policy with Lloyds which covers the PIF for $3 Million per contract loss. WC staff are in the process of ensuring that in each case this insurance is in place and the necessary precautions are being taken to protect PIF interests. Construction loan contracts will terminate upon completion of construction progressively over the next 12 to 18 months. The policy will have to be claimed upon if the developer defaults on repayment of the loan in part or in full.

Sorry: dinner's ready. More later on "capital" distributions, form of AG organistion and the answers to my list of questions.
Steve

 

[Rocky1]

Re: Octaviar MFS Premium Income Fund PIF

Hi Zixo,

I was at the Melbourne meeting and yes it appeared that the show of hands in Melbourne were happy to consider a listing on the NSX as it was explained it was a vehicle to allow those who wanted to exit the fund to do so as the sale of those units did not deplete diminish the actual assets held in PIF.

Although as mentioned earlier by Jadel, if you have unitholders purchasing units at a significant discount to our $1 and there are motions in the future that need to be voted on, they may not be in favour of some resolutions considering they may be getting paid a very handsome return on their investment. Still it is a vehicle that allows those who vote to liquidate to get their money as they want. Please refer to my earlier quote on page 40 about possible plausible strategies where the NSX listing may provide some possible strategies to be considered if the buyer offer price was reasonable.

Zixo

I would probably say 25% voted for NSX (although there was some confusion by many around this part of the question, some though JH said "who is opposed to the NSX), 25 % against and probably 50% did not vote

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

I stayed till the death in Sydney, here goes some new points:

An overwhelming NO for support to NSX listing from a show of hands of investors.

1 investor kept on JH and the NSX listing will now be put to a vote as per her fees and whether we want to liquidate or go down WC path.

0.7% WC fee based on Net Asset Backing at 45 cents per unit. This will cover all associated costs but not the legal fees arising from action to recover $147.5m and not the listing costs on NSX or the yearly $100k.

JH will prepare a more in depth account summary of assets and loans.

WC will look at action to recover insurance from PI and directors (didn't sound like it was her first order of priority.

If we vote next month to have the fund continue as a going concern, we will get 3c by Xmas, one payment late Oct then another just b4 Xmas.

Then another 3c b4 end of fin year with a possible 'special distribution' in Jun09 depending on cash on hand / health of fund.

The distributions will be classed as 'capital' for tax purposes as there are so many existing losses in the fund, the dists even thou income will be treated for tax purposes as capital, which means in 3-5 years we get miraculously our full unit value back, that value will be $1 not $1 less the amounts that were dist as 'capital'.

This will continue for quite some time due to the massive losses, good for people still working, not so good for retirees with super, as it was tax free anyway.

JH will work with action group to get as much info to ASIC, she has had 'extensive' talks she stated, yet when I spoke to a rep of WC last week, that person said that WC had nothing going with ASIC..go figure.

Whoever has asked for the investor register will get in 24 hours..free!

OK so if we go with JH 3-5 year plan it will incl stage 1 = stability 6-18 mths batten down maximise assets, finish projects (yes we have the funds) stage 2realise the most value via riding out this bad period and hope upturn in property and investments then build via new investments...this is the simplified version, JH does not have all answers but believes she can get it to min 45c as a going concern in 3-5 years, 65c if we get $147.7 and $1 and beyond if ALL the best conditions and outcomes go our way.

Realistically if we get 65c in 3-5 it will be a good outcome and in the meantime get at least 6c / unit tax free and get some other things like OCV & insurance etc as an added bonus.

Apparently there was some hardship cases paid out and more future ones at 45c which I feel must be EXTREME and GENUINE as they are saying liquidation will yearn only 14c..so no more duping.

NO investments will be to any WC related companies or deals..EVER.

OCV has only officially recognised as owing us $50m, we have launched legal action to be listed a creditor for the $147.5, this is being pushed as a matter of urgency. If OCV go into receivership tomorrow, we would not ne recognised as a creditor for anything but the $50m..disturbing considering Sep court hearing to wind up by PTQ!!

JH 'happy to be accountable'..welcomes action group..more on that soon!

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

It would be a good idea for our AG to liaise with the DOHNC AG as they are further down the track than we are and may be able to help with info etc.

PS I am originally from Port Macquarie and know the people involved.

Can the PIF AG get a copy of the DOHNC AG mission statement and constitution to model ours on?

 

[DStar]

Re: Octaviar MFS Premium Income Fund PIF

I went to Sydney to see a full-house attendance. I am sceptical about WC and the chances of any manager either giving investors a more tangible exit option than liquidation (as in DOHMC example) or in giving investors long term comfort thinking their money is safe for another 3-5 years.

What PIF has as 'assets' is actually a 'loan book' complete with obligations and landmines set up by MFS. Most experienced institutions would not touch PIF with a proverbial barge-pole. Instead they are locking down for worse times ahead, cutting their losses now and preserving liquidity. That's a clear PIF option for investors to get ‘bird in the hand’. It may well be better than 14cents - after all we haven’t seen the WC worksheet or a Korda Mentha certificate of estimate.

Option B) PIF investors are prone to wishful thinking of a white knight. Mind the rhetoric about commitment - I shudder seeing TV ads showing investments as a golden egg in a crib! MFS shenanigans have far reaching consequences, that a 'bird in the hand' may be better than Jenny’s “hopeful” 3-5 year expectation based on her 'a glass half full' personal experience.

The white knight approach is attempting to lure a mandate to run 3-5 years based on a token 3 cents. It will take this to win votes bto beat liquidation, but there is no real 3-5 year strategy plan! Another 3 cents may soothe investors for a year, but by then investors have no say at all.

JH describes herself as country girl made good and boasts awards, but has been in this sector only a few years. Michael King had similar credentials and background which both created and destroyed the baby before it matured.

Jenny argues future success for PIF because it was formerly a "very successful fund" in Top 10 funds in Australia. Crikey, when does the propaganda stop? King even promoted it as the next Macquarie Bank! But Jenny has already said it was a private bank for MFS. Profits were created in the books by movement of funds needed to draw in more investors that paid the interest. Please Jenny, which story are you sticking to?

As far as risk into the future, the PIF is not a diversified investment fund. WC figures show that, after the write downs, virtually all PIF interests remain in construction loans (37?). This means WC has inherited a "loan book" – with contracts, obligations, legal issues. Up until the collapse of credit markets, such ‘books’ were packaged and traded happily with banks and super funds. Now there is no market. No one will refinance the loans so PIF is stuck with an MFS legacy of fallen values and potential legal landmines. Its already started as WC stopped building payments, projects stalled, damages claims arise.

Did anyone notice the litigation business is booming ?

 

[Mary Lynch]

Re: Octaviar MFS Premium Income Fund PIF

Zixo,

I was at the Melbourne meeting. When Jenny asked for a show of hands on NSX listing, it all happened rather quickly. She may have even had a hand over her mouth, or was swishing her hair out of the way when I, and several others around me who were sitting in the back quadrant didn't here the first question clearly, and thought she had said "for" first rather than "against "first"! Thus we didn't vote "for". Then were left not voting as the next option was "for"!

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

There's a wikipedia entry for Return of Capital that was informative for me.

http://en.wikipedia.org/wiki/Return_of_capital

So is WC's proposal for a 'closed ended fund'? For non-retiree investors the tax position is significant.

How much of the ATO's $52M+ claim against OCV is for the related party transactions that has caused so much damage to the PIF under the rule of Peacock/King/Hutchings? That's salt in our wounds.

 

[reasonable]

Re: Octaviar MFS Premium Income Fund PIF

Zixo

I would probably say 25% voted for NSX (although there was some confusion by many around this part of the question, some though JH said "who is opposed to the NSX), 25 % against and probably 50% did not vote

I would say that there were significantly more people who did not vote at all and it was unclear whether more voted for listing than not.

 

[deano1]

Re: Octaviar MFS Premium Income Fund PIF

can anyone tell me if there has been any specific details provided re the assets and the asset classess - do we know what specifically the assets are - until you know that you have no ability to attribute any value to the fund - if wellington are fair dinkum they should be providing this to unit holders - dont trust the white shoe brigade from the gold coast - i'm not directly impacted by this - but i do have 30 years experience in Investment banking and unless you get a specific listing of what the assets are you can 't value your fund - i'd also suggest from the related party transaction etc - the players here are too close too each other and the longer it all takes - all your doing is allowing the spin doctors to drag things out - time is money and the money is yours and they will keep sucking your blood whilst theres blood to be sucked - trust no one

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

As far as risk into the future, the PIF is not a diversified investment fund. WC figures show that, after the write downs, virtually all PIF interests remain in construction loans (37?). This means WC has inherited a "loan book" – with contracts, obligations, legal issues. Up until the collapse of credit markets, such ‘books’ were packaged and traded happily with banks and super funds. Now there is no market. No one will refinance the loans so PIF is stuck with an MFS legacy of fallen values and potential legal landmines. Its already started as WC stopped building payments, projects stalled, damages claims arise.

Did anyone notice the litigation business is booming ?

We know it's a loan book. That's what the fund was set up to be.

What better person than to have a corporate lawyer in charge then. Minimise legal fees.

Are you suggesting we sell everything in a depressed market? Wow, that's sage advice.

Are you a PIF unit holder? Are you an OCV Ltd shareholder? Both OCV Ltd and LLA will gain from PIF losing its bite. Who'll chase the $147.5M+$50M from OCV? Who'll chase the $10M+$35M from LLA? These actions need people on the ground not wishful thinkers. And so far WC is the ONLY one to put their reputation on the line for a commitment. And that's all we've got.

 

[RickH]

Re: Octaviar MFS Premium Income Fund PIF

Hi,
I was at the Melbourne presentation and I have no association with any RE.
Personally I felt that the Melbourne vote was heading towards an UN-listed Fund and so I made a simple presentation that I believed a listing on the NSX would probably be the better option. It then created a minimal vote.

I then mentioned my concerns to JH and felt that she could simply explain the difference and benefits of using either an UN-listed or NSX listed fund.
Unfortunately this did not happen.

It is my impression that the investors do not know the basic differences and benefits but believe that the UN-listed is 'safer'.

It would be great to hear what JH is really planning for the funds future from her business point of view.

I assumed that the NSX listing would create:
1) Cash flow for those who need the funds immediately, plus Centrelink valuations.
Unfortunately early sellers will probably loose more than their fair share and the buyers will possibly make a very good return.
2) JH may really want to help investors to recover 100% of capital together with a regular income of say 1.5 cents per quarter.
BECAUSE IN THE PROCESS SHE WILL CREATE A PROFITABLE FUND MANAGEMENT BUSINESS.............
3) She is a Merchant banker and has the ability to raise funds.
4) There are 10,000 unit holders and they will invest more money if the fund starts to achieve realistic goals etc....

In simple terms we need to consider the benefits created for long term fund managers such as -

A SIMPLE COMPARISON:
1) ASX Listed Managed Share Fund.
AFI, Australian Foundation - The share market is crashing but there is no pressure on the fund managers to sell any shares. They can continue to follow their long term investment strategy.

2) UN-listed Managed Share Fund.
XYZ Fund has a very large number of capital withdrawal requests from unit holders. Unfortunately no-one is investing and this creates a situation for the fund managers because they will be forced to sell part of their portfolio to cover these withdrawal requests. The shares that are sold will probably be the Blue Chip shares because the others have already fallen off the cliff.
Basically the fund over time will hold a portfolio of shares that the fund managers really do not want to be holding and the portfolio could end up holding a selection of their spec shares. The long term investors may have future problems. If the fund cannot raise additional investor funds. The fund will be closed and the remaining unit holders will have to take what is left.

Please consider and then list the benefits and problems to make an informed decision: NSX Listed Fund Vs UN-listed Fund.

NSX LISTED FUND:
1) Major benefit is that a strategy can be created and assets can be held if desired for the longer term because there is no requirement to pay out capital withdrawal requests by investors. The transactions will completed outside of the fund between two or more NSX buyers and sellers.

UN-LISTED FUND:
1) May be forced to sell the best assets to repay unit holders withdrawal requests and hold onto the unsellable assets.
This may creat problems for the fund manager because they may not be capable of attracting further investors capital and the fund may need to closed. This will create a major financial problem for the remaining unit holders.

 

[zixo]

Re: Octaviar MFS Premium Income Fund PIF

Thanks to all of you for your feedback re the NSX debate.

At the meeting I mentioned the NSX was still a very grey area for many Investors given what was said about the Melbourne vote as opposed to a 95% + voted against in Sydney. I asked JH if she could give us the positives and negatives with Listing – she did not respond at the forum but she has promised to do it- hopefully other AG members could follow her up with the same question further down the track.

The vote to keep the fund running as a going concern needs a 75 % investor backing.
The question which I had difficulty in trying to express myself at the forum was “ if the fund is to be run as a going concern, will the going concern include the listing of the NSX as a MUST HAVE as part of the condition” thus becoming one question

I am a little worried about how the question on the vote will be posed in August as I gathered most investors wish to fund to keep running but object to the NSX. And I don’t like the idea of mixing the two.

I hope I’m making sense in my query this time.

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

You make a good point RickH, that's why we need more info from WC of the exit strategy once more of our capital comes in with or without NSX listing. I need more info as to how I will vote and she admitted that she has a lot more homework to do coming out of our comments and concerns from these forums.

I also believe that a structured action group is necessary to express concerns, for transparency and to work with WC to get what we need. One thing that was not mentioned (of course) is that another RE can also be voted by unitholders if objectives that have been mentioned by JH are not met or she tries to steer away from our best interest, but why would she I mean SO much scrutiny, her great rep.

She was actually asked today how her other funds under management were going..one fund 15% return another 8-10% and she had planned for the interest rate rises..very clever...she has her own cash in the funds..wish I had mine in there instaed of PIF too!!!

We need more info on stategies for exit and the assets to asceertain the true v-a-l-u-e then I have no prob in giving her the baton..as I believe the majority of that Sydney room...liquidation and possibly 14c is the flipside ouch!!

 

[DStar]

Re: Octaviar MFS Premium Income Fund PIF

PIF fund's assets are not, as JH implied, like freehold properties that WC may hold and sell later at its discretion. Nor will properties left ‘on the vine’ by the mortgagee necessarily rise in value… even if the general market gets better in 3-5 years. Construction loans have a short lifespan. Property values are hampered by mortgagee interference. It’s a timing game. Fund assets are trade debtors. Borrowers may well resist WC self serving intentions. Jenny claimed she didn’t detect the $147.5Million hole in the accounts in due diligence. What else is there to come out with 37 deals and its evident that not all borrowers have been ‘consulted to’ as Jenny said.

Before collapsing, MFS and its structured finance arm VERSA reputation was "the lender of last resort" - a predator that manufactured 'defaults' to load borrowers with penalty interest and fees, to be later deducted from the asset sale. When asked where does the earnings come from ? Jenny answered ‘capitalised interest’. Fine, Jenny, if the property actually sold for more than the capital borrowed and the borrower didn’t take you to task for the rort. Otherwise it’s an unsecured debt that probably has already turned to vapour.

Reading the MFS manual, King also specialized in ‘property litigation and debt recovery’. MFS was widely regarded as a ‘bully’ that took control of borrowers property using legal brute force and intimidation of security guards. Now that the army is gone, those affected may well bite back and cause a reversal of fortune for the predator. PIF is inheriting a “can of worms”. I’ll bet PIF legal budget are ‘disbursements’ and not included in 0.7% management ‘fee’.

In terms of the $147.5Mill, if there is a breach of the Corp Act then an official Liquidator has greater singular power to persue that from MFS as well as the monies lent to LLA. Jenny only spoke up a 'deal' with Arctic to stay in as creditor in return for a share of the LLA profit , if and when James Packer was ready. Thats hardly a ground breaking deal.

We know it's a loan book. That's what the fund was set up to be.

What better person than to have a corporate lawyer in charge then. Minimise legal fees.

Are you suggesting we sell everything in a depressed market? Wow, that's sage advice.

Are you a PIF unit holder? Are you an OCV Ltd shareholder? Both OCV Ltd and LLA will gain from PIF losing its bite. Who'll chase the $147.5M+$50M from OCV? Who'll chase the $10M+$35M from LLA? These actions need people on the ground not wishful thinkers. And so far WC is the ONLY one to put their reputation on the line for a commitment. And that's all we've got.

 

[deano1]

Re: Octaviar MFS Premium Income Fund PIF

if you list on the NSX - a unit will be worth lets say 14c max whilst the uncertainty remains over the value of assets - so for 10,000 units thats a gross value of $1400 - then deduct the commission for selling - somewhere between $100 - $300 - you'd be nuts to list the thing - off market transfers between willing buyers and sellers controlled thru the unit registry is the best option to allow those who desperately need to liquidate the chance - listing it allows too many other leeches into the game to suck whats left of your money away - NSX is an illiquid market - few stocks - few brokers - you will not extract the best price for your asset via a listing on the NSX

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

Hi everyone, nice to have met a few of you at the Melbourne meeting. Regarding the show of hands business about the NSX listing, I was sitting in the second last row together with another AG member and when the question was proposed FOR listing there was a stunned hush amongst the crowd, and no more than 50 people put their hands up. To me people seemed shocked and embarassed to "go public". Even Jenny seemed to pause and hesitate. A few minutes later....enough time for everyone to compose themselves...we were asked for a show of hands against listing....even less people put their hands up.....I don't believe we got a good indication how people in Melbourne really feel about NSX listing.Most people I spoke to are really desperate for information, they are mostly elderly plus! and probably don't get on the net much.