Re: Octaviar MFS Premium Income Fund PIF
Update: Newcastle WC Forum at Panthers Club 14/07/08
* Jenny still wants to list on the NSX early September, if she gets the RE 75% vote. She said it would be only part of the August proposal coming. NSX only part of the solution - WC will endeavor to encourage PIF unit buyer interest
* NSX show of hands on my request to Jenny was about 95% against listing and 5% for listing - Jenny looked a bit taken aback by that. That thoroughly backs up Sydney hands show and proves Melbourne hands show was because of confusion. Jenny should pay careful attention to this vote outcome and consider her homework before August vote accordingly.
* 1.5 cents capital distribution October, then December and quarterly 1.5c capital distribution thereafter, with the possibility of some kind of special distribution payment before end of next financial year, if extra monies come in. These payments were called capital payments, but are a mix of new income and capital, but will be called all capital because of the losses in the fund. I didn't hear her mention it was tax free, but other forums did. (Breaker> I'm not really trying to sell this folks, but based on the 45c valuation that actually works out at a payment of 13% per year - too bad its mostly our own money)
* Someone asked - "what's if someone buys PIF units on the NSX, will they be able to get in on the 1.5c per quarter and even the special distribution. "good question said Jenny. Yes! They will and that will be part of the incentive for investors to buy on the NSX, we need something to encourage investors" That's why we really need to know the exact break up of this 6c p.a payment, because if you do, you will find out your % real interest p.a and tax free for a good while to boot.
* Related MFS LTS party investments in the fund ad up to a total of 20% of all assets in the PIF
* If PIF fund liquidated, Korda Mentha would probably be hired as they have already a good knowledge of the PIF
* 14c liquidation is based on the fund being liquidated between August 08 and 31 March 09
45c & 65c figures both an a recovery over 3-5 years
* PIF is " not as liquid as it might be and therefore needs a 3-5 year recovery timetable
* NSX has 66 entities listed on it
* MFS charged 2.3% Jenny charging 0.7% fees
* 14c price on liquidation must be an scare exaggeration, surely it's worth more than that - answer:" unfortunately a reality" and with the 14c you would have to deduct the costs of liquidation as well .
* 6 different parties had a go at RE (didn't mention the other 5 parties)
* Original Lloyds of London security deal ceased 5 years ago and it was replaced with the 50M support facility. (but apparently Lloyds still has some kind of policy in place, either partly re-instated or much revised )
* Assets that have been hurriedly liquidated already by WC PIF to pay back PIF debt, are at a net loss of assets (to previous value of assets) of $63 Million
* Mathew Walton QC WC litigation will cost $25,000 or thereabouts
* I proposed the following: One of the main concerns of the PIF Action Group is the question of the NSX listing ......We request that the NSX not be the only method of redemption in part or in full. That it be a separate option at best.
Answer: We hope to have a different model in 3-5 years
I asked the question: Jenny, have you thought of any other long term redemption vehicles besides the NSX?
Answer: Hope to have a better solution than just the NSX listing
I pointed out a redemption moratorium with 6c payment pa for 2-3 years and after that allowing redemptions for those who want it OR some kind of promissory note scheme (the longer you stay in the fund, the more you get back on redemption) OR a work out of profits and sale of assets if necessary (after fund stabilised) and then redemptions.
Answer: We have a bit of homework to do before August vote and will hopefully advise our answers.
From the above you can see that Jenny specialises in answering in part, but not really answering.
I gave her the example of sometime down the track, after 5 years of sacrifice and staying with the fund, that WC may have built the fund up to 80c and then we want to redeem via the NSX only to find the NSX is only offering 40c (then you have to deduct inflation @ 4x5%=20% + 2.5% NSX fee) - I said, so what's the good of that, whats the good of bragging about the 80c when in reality it is NOT 80c if you have to redeem via the NSX?
Answer: I appreciate your comments and understand that any stock exchange has volatility, it can go up or down, (and the NSX is only part of our plan or something to that effect)
* How has WC been performing apart from PIF - well!, 5.5% to 8.75% for a couple of funds (more for another fund)
* one investor complained of the "forced risk shift" placed on us by listing on the NSX - we never wanted to be in volatile investments
* Asked about going up from 45c to 65c via the recovery of the 197.5M from MFS. Jenny, for the first time, admitted that she did not think so was going to be able to get all of it back. That 65c appeared false advertising to one investor, by Jenny suggesting she might get it, but knew she couldn't.
* Another investor asked, what about DELISTING from the NSX when those needing desperate redemptions via the NSX are done about 12-18 mths from now.
Answer: WC will keep an eye on the fund. Being listed forever is NOT the idea.
* I asked, what main capitalisation vehicle are you going to use to bring the fund up from 55c/65c to your targeted $1?
Answer: "When all PIF debt is paid, we are going to be in a strong position to buy assets on the market at a discount and manage that asset to make a profit". Sounds like she was saying, when strong and respected, we then become a vulture fund? OR perhaps acquire assets that earn a regular income for profit.
* Investor question: If you get a bargain, will you put the best bargains in the PIF or your other WC funds?
Answer: Two funds including the PIF. To put bargains in whatever fund is the most suitable - the PIF has a basic mandate and we will put bargains that suit it in the PIF.
* I pointed out that Chris Scott owned 50% of WC, about 14 months ago, is that still the case?
Answer: Chris Scott sold out his share in WC, when he moved to Singapore, he no longer has an interest.
He was supposedly your mentor? Yes he was. I ring him regular re the Support Facility and how its going.
* Regarding an AG member on the board?
Answer: She didn't exactly say that she would accept an extra member on the board, but she did say, that if the AG organise a committee, that they could get access to board meetings. >That's different to being on the board I thought
* About 220-250 people turned up at Newcastle Panthers Club WC forum and it was a rather conservative audience, except for one or two One poor fellow claimed that he was "not into all this financials crap and just want to know where all my money is now." He had a car or bike accident some time ago and lost a limb or two, got a payout and put it all in PIF and said he desperately needed his $120,000 to buy new limb/s. Jenny was halted by that and had a quick thought and asked if she could talk with him during the break. On leaving myself, I saw he was in audience with Jenny and several other WC staff.