Wellington Capital PIF/Octaviar (MFS) PIF

R.H (Rick) Mason · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Javier said:
Well Rick you will vote for liquidation then, and since you won't get that, you may get NSX, where you will sell your dad's unit for 14c or less then. Good choice for your dad!

No, I will vote on the merits of the FACTS (not speculation) that are presented to us when the vote is called. My Father is beyond caring what happens, and I doubt that he will live to see this resolved. Your sarcasm aside, I will still act in his best interests.

Rick.

DoraNBoots · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Any feedback from (or on) the solicitor? I believe Sydney members met her yesterday?

Duped · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Rocky1 said:
I am sure the 30 Million quoted by JH would include agent fees and other costs associated with selling (legal etc....)

The whole 30 million would not go in the liquidators hand

I never implied it would all go to liquidators.

Rocky1 · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Duped said:
I never implied it would all go to liquidators.

Duped

sorry if you got the wrong end of my post. I actually value a lot of what you have to say, I was merely pointing out to others that the 30 mill in liquidation cost would be made up of many factors and not all would go the liquidator.

My "be negative somewhere else" was actually aimed at those being negative. Whilst we are all entitled to our opinion some negativity clearly has had little thought put into it

Javier · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Dora at this stage the lawyer has gone away and has to come back with thoughts etc. It will take some time and plus there are still too many vague details as to assets and other issues that have arisen from questions by investors at the forum, we just have to be VERY patient, it is most tricky as you we can all appreciate.

deano1 · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

DoraNBoots said:
Article from todays ARF attached.

this seems to be a positive result - whilst they have to focus time and effort on the quick wins - the heavy lifting needs to be done as well - can anyone confirm to me that they have recovered $25mill on a $30 mill exposure here and thats it or is there still further sales to go that could improve that situation even further on this particular asset

Duped · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Thanks Rocky1.

seamisty · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

deano1 said:
this seems to be a positive result - whilst they have to focus time and effort on the quick wins - the heavy lifting needs to be done as well - can anyone confirm to me that they have recovered $25mill on a $30 mill exposure here and thats it or is there still further sales to go that could improve that situation even further on this particular asset

Hi deano and welcome to the thread. This information has only just come out via the media, your question is a good one. Perhaps an investor who will be attending the next WC meeting could ask it. Or you could e-mail investorrelations@newpif.com.au or call WC on the info hotline 1300 854 893
Regards, Seamisty

flatback · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Rocky1 said:
Deano1

Not sure how far back you go with reading this thread but after the Melbourne forum I posted that I had asked jenny to provide a transparent break down of the fund- assets, loans etc (I understand that due to confidentiality reasons she can't provide the names of lenders so I asked if she could provide it in a Loan A, Loan B type format). She committed to providing this information when she releases information regarding her plan to take the fund forward upon which we are to vote in August.

I think people need to remember that JH is only 40 (young), she has a very good resume and has a very good reputation, which i am sure she wants to uphold.

By the end of next year we will have hopefully received 9 cents in predominantly tax free distributions and our remaining units will be worth at least the current 45 cents , so to sell now at 14 cents would be outrageous.

Whilst on the 14 cents if you believe that is all this fund is worth, you are kidding yourself. As I have openly stated on 2 or 3 occasions on this thread, I went through the Fincorp debacle, which I perceive as far worse than this and to date through ADMINISTRATION (different to liquidation) we have received 50 cents with a further 7 cents due shortly and potentially more in the future pending legal action.

A large amount of the current losses in the fund are due to capital devaluation, which is something that has occured across the board, so if you want to sell $11 million properties for $1.1 million (example used by JH - true value of one of our properties v a recent offer) then go ahead and vote for liquidation but this would be completely sacrificial and clearly you have not considered everyone else, especially those in the wholesale fund and expect A fight from those who want to continue the fund.

Do the maths first!!!!!!!!!!!!!

have to agree very strongly Rocky1 it seems we have a couple of very frustrated people here (as we all are ) and reading between the lines , one is playing with somebody else's money,one appears to be a developer, and not sure about the other but whatever, they are only concerned about their immediate pulling of funds no matter what the consequenses if you can't be constructive you are not worth much to this forum, i could be very wrong in saying that ,but i have been reading these threads for a while now ,and on occassion put my own 10% in, and i must say, i am only now seeing this kind of attitude,for mine i hope this feeling does'nt gain any ground. cheers Flatback

iamspeed · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

deano1 said:
I really want to understand what the $300 mill of alternative investments is - the majority of investors in the fund would not qualify to invest in an alternative investment and why were these considered appropriate investments for the fund - ASIC /APRA need to be involved here and that is the responsibility of the Responsible Entity and Wellington need to get on the front foot here - the longer this stuff takes the more difficult it is to freeze assets - which in the light of day maybe accessable by the fund holders.

Deano1

Half of it is the crap loans MFS shovelled into the Fund (from their balance sheet) in Nov/Dec when they drew down on the Fund's line of credit with Royal Bank of Scotland. Sounds like some sort of fraud to me.

Good luck with ASIC/APRA. When was the last time a listed company (although suspended indefinitely) had their assets frozen? They'll wait until it is too late, they always do. At the end of it they'll go after Financial Advisers in the great fee versus commission debate, then they'll beat their chest (even though most people probably invested directly with MFS).

My shout (paid when I get the $1 back) if you get ASIC to move on Octaviar to get back what was effectively stolen from the Fund late last year.

Cheers

iamspeed · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

seamisty said:
Hi deano and welcome to the thread. This information has only just come out via the media, your question is a good one. Perhaps an investor who will be attending the next WC meeting could ask it. Or you could e-mail investorrelations@newpif.com.au or call WC on the info hotline 1300 854 893
Regards, Seamisty

Seamisty

Already ahead of you. Am waiting on the response. Don't you love how they quote "property executives".

Cheers

deano1 · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

iamspeed,

you hit the nail on the head with the fraud angle - there is definitely fraudulent activity that has gone on here - and that is why ASIC /APRA need to be involved now - the directors of MFS / Octavier who presided over this are personally liable if they have participated in this fraud - its not MFS assets i'm talking about getting frozen it the assets of these thieves - and i garuuntee you they are hidden offshore - in trusts etc - but someone needs to be getting these people under a spotlight and work out where all this cash has gone - in respect of the alternative investments - if as i suspect your spot on right there - there is no way the fund had the authority or mandate to do this and therefore they are fraudulent transactions - i hope the MF /Octavier directors have their PI insurance paid up - thats got to be an angle to persue - Wellington have to get to working with the regulators

Regards

Deano1

Jenny · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

I have just received the following email from my financial advisor. We were put into the PIF through Avenue Capital Management, as I think many others were. I did not realise until now that we will not have a vote.

"I have attached the investor update which I assume you would have. Not mentioned in the attachment, however, is that retail unitholders will be given the opportunity to vote in August on the future of the fund (wholesale unitholders, of which you are one, cannot vote, though their custodian will vote on their behalf). THe custodian is Bond Street Custodians ( Macqaurie Bank). I am seeking further clarification on this point and will advise you in due course."

Any guesses about which way the custodian will vote, considering they are still charging us management fees and we don't seem to be able to extricate ourselves?

BTW I much appreciate the summaries and information AG members are posting. However I am becoming a bitter and cynical old woman!!

Jadel · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Dear Fellow Action group Members

Some quick thoughts and please if anybody is more competent in this area let know if any of my reaoning or facts are incorrect

I am not a financial expert i just have a gut feeling on this subject .

As you all know from reading my posts I am totally opposed to listing on the NSX

I outlined to Jenny Hutson vigorously at the Brisbane meeting the reasons for my opposition to the proposal,

Sentiment and liquidity are the primary drivers of price regardless of the net tangible asset value of stock. At this time world markets at their rock bottom in this regard

The decision then to place us in a market, which is practically unknown and has the bowel movement of a one hundred year old year old tortoise, is ill conceived and fraught with danger.

I have nothing against Jenny Hutson personally, she is a very successful and intelligent businesswomen therefore I believe she will be able to evaluate the merits and benefits of the proposal for keeping the fund as a unified group of original investors

1/ Firstly no listing costs on the and associated unit conversion costs to the NSX

2/ the minimum fee for a NSX trade is 2.5% Wellington capital could easily reduce this fee to 0.5 % or less and make an internal profit on the transaction

3/ the yield would effectively increase relative to purhasing on the NSX by 2% for the year
4/ Markets especially small illiquid markets can easily be manipulated by trading activity designed to cause panic.

5/ / Wellington Capital could estimate a set discount to NTA for new buyers on a half year basis... This would again stabilize and prevent panic

6/ Transparency the certainty that the fund will not be sold out by new Vulture accumulators at a later date

7/ Investors understand that they are totally committed to a long term capital growth project...

Now some people are going to question my motives but I can assure you I will not be buying more units at this time. I have a twenty three year old daughter studying at university that I can not marry off to anybody at any price and she eats like a horse,

I am an average investor with no hidden agenda other to get the best possible return out of this disaster for myself and other fund members

Regards Chris

deano1 · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Jenny - the advice you are getting is wrong - Bond Street custoian is mearly the registered holder of the units - you remain the owner and bond street custodians ( read Macquarie Bank) should be contacting all beneficial owners and asking them to provide their voting intentions and then they will be able to direct the vote in the manner in which the beneficial owners request - they dont have the right to vote your units without your authority - one caveat on that - unless you have signed something in an agreement giving them that authority to vote on your behalf without contacting you - Macquarie Bank wont want bad press on this - thats the angle to persue - go to the top of Macquarie Bank - easy win for macquarie to contact all unit holders and obtain their voting intentions they look like the good guys for a change

RickH · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

RickH said:
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 create problems for the fund manager because they may not be capable of attracting further investors capital and the fund may need to be closed. This will create a major financial problem for the remaining unit holders.

Further to my original statement (new to this type of communication).

I am confused with some of the discussions. There will be a vote in August. There appears to be a chance that the fund may be run down and then closed. My logic tells me that we need to understand what the potential benefits from the available options.

PREMIUM INCOME FUND started as a First Mortgage Income Fund with Lloyds insurance.
It has evolved into being a diversified fund but ended up supporting MFS with unsecured loans.
(I thought that all loans had to be secured by a first mortgage - check legal.)
We are talking about money and nothing else. Our emotional feelings should not become the major source of communication. The problem has occured now move forward.

LEGAL:
Obviously all legal actions should be followed against MFS and their decision makers.

FUND STRUCTURE:
Question - How many choices do we really have?
1) Immediate forced sale of all assets and receive about 14 cents.
2) Reasonable time to sell assets and collect 45 cents
3) Create a new UN-listed Income Fund - RE unknown.
4) List on the NSX and let Wellington try to achieve their goal of 6 cents per annum and $1.00 value within 3-5 years.

ARE THERE ANY OTHER OPTIONS??

I personally believe that there are only two options:
List on the NSX or UN-listed.
My preferance at this point in time to go with NSX subject to presentations..

GOING FORWARD:
Consider if an $11 m property can attract a bid of only $1m - How many other properties are available for forced sales?
My current view is that JH would need to be incontrol of a vehicle that has the ability to grow a diversified investment portfolio with asset allocation guidelines.

Jadel · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Cant find the damn System Administrator to edit my post

In point 3 I meant to say the the yield would effectively increase relative to purchasing on the NSX for a yield

2.5% commission on the NSX effectively gives any purchaser a 3.5% yield for the first year who in the hell is going to buy for yield when you can get a 3 month bank return above 8% unless the price falls by at least 50% or more

Duped · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

I'm totally with WC about not making the loan positions public. It's comercial in confidence. I'd be livid if my bank made the details of my debt position public. It instantly and single handedly puts potential buyers in a position of knowing how hard they can push on a selling price. Obviously not going to be good for PIF either.

I'm certain that if an AG committee gets to see the loan book they'll be bound by an NDA (Non Disclosure Agreement). The purpose of such an exercise will be about trust. If you don't trust WC then you may trust a group of fellow units holders. I won't be on that committee because I don't trust myself to understand what I see. I needed a friend to explain to me what 'Financial assets held at fair value through profit and loss' means in the PIF 2007 annual report. (I outsourced those tasks to my financial advisor and trusted them to do their job)

Trust is one of the most valuable commodities. Look how well Swiss banks do out of it. (Imagine a life where you need a contract in place every single time you asked someone to do domething for you.) I'm guessing, that is why JH's presentation covered so much about herself. She's asking us to trust her.

One of my favourite quotes: the fish rots from the head down.

I'm from the Paul Keating school of thought - the only thing you can trust is self interest. The only true motivation is self motivation. Be pragmatic. Why fight it when you can harness and put it to good. (My words)

JH volunteered she was involved with setting up PIF. She was involved with S8. Her name's all over all of this. Her Fund Management reputation is at stake. She's put WC's name behind it. Think about how much negative sentiment 10,000 investors can spread. Adds up to a lot of motivation to do OK by us. All this counts for a lot to me.

But I could just be a sucker.

Duped · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Jadel said:
Cant find the damn System Administrator to edit my post

In point 3 I meant to say the the yield would effectively increase relative to purchasing on the NSX for a yield

2.5% commission on the NSX effectively gives any purchaser a 3.5% yield for the first year who in the hell is going to buy for yield when you can get a 3 month bank return above 8% unless the price falls by at least 50% or more

WHAT!!! 2.5% commission. That can't be right. That's HUGE.

seamisty · 10 July 2008

Re: Octaviar MFS Premium Income Fund PIF

Duped said:
I'm totally with WC about not making the loan positions public. It's comercial in confidence. I'd be livid if my bank made the details of my debt position public. It instantly and single handedly puts potential buyers in a position of knowing how hard they can push on a selling price. Obviously not going to be good for PIF either.

I'm certain that if an AG committee gets to see the loan book they'll be bound by an NDA (Non Disclosure Agreement). The purpose of such an exercise will be about trust. If you don't trust WC then you may trust a group of fellow units holders. I won't be on that committee because I don't trust myself to understand what I see. I needed a friend to explain to me what 'Financial assets held at fair value through profit and loss' means in the PIF 2007 annual report. (I outsourced those tasks to my financial advisor and trusted them to do their job)

Trust is one of the most valuable commodities. Look how well Swiss banks do out of it. (Imagine a life where you need a contract in place every single time you asked someone to do domething for you.) I'm guessing, that is why JH's presentation covered so much about herself. She's asking us to trust her.

One of my favourite quotes: the fish rots from the head down.

I'm from the Paul Keating school of thought - the only thing you can trust is self interest. The only true motivation is self motivation. Be pragmatic. Why fight it when you can harness and put it to good. (My words)

JH volunteered she was involved with setting up PIF. She was involved with S8. Her name's all over all of this. Her Fund Management reputation is at stake. She's put WC's name behind it. Think about how much negative sentiment 10,000 investors can spread. Adds up to a lot of motivation to do OK by us. All this counts for a lot to me.

But I could just be a sucker.

Duped I agree with what you are saying about not alerting vultures to distressed projects. I am sure JH could compose a list of our investments by type, money lent from the fund, money outstanding,progress of the project, security, expected loss(dare i even mention profit?), maturity, etc. without specifying the borrower. The media will probably fill us in on specifics over time LOL!!!! Seamisty

Wellington Capital PIF/Octaviar (MFS) PIF

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