Wellington Capital PIF/Octaviar (MFS) PIF

[great dame]

Re: Octaviar MFS Premium Income Fund PIF

I've attached an article from yesterdays GC. I think the last part of it (copied below) explains the rights issue we have been warned about, is this right? Can you tell me if the PIF is listed, would we have a say whether or not more capital could be raised in this way?

"LLA's stapled securities fell 0.2c to 4.6c yesterday but were still well up on the 4c rights issue price which formed the central plank in the recapitalisation plan. The issue, underwritten by Arctic, raised $100 million but it was largely shunned by LLA's existing security-holders. Many of them would still be shell-shocked by the massive drop in value of their holdings since the demise of MFS, which saw their investment in LLA fall from above $1 last year to a low of 3.3c. Original security-holders now own about 10 per cent of the group."

I hope i can answer your questain Dora Once the PIF becomes listed it then becomes sort of a company we are then share holders of that company The board will have full control how it is run share holders do not have a say on right issues etc etc But are given first choice to buy extra shares if they which to
Yes i know just what your thinking ////////////

 

[Jadel]

Re: Octaviar MFS Premium Income Fund PIF

I've attached an article from yesterdays GC. I think the last part of it (copied below) explains the rights issue we have been warned about, is this right? Can you tell me if the PIF is listed, would we have a say whether or not more capital could be raised in this way?

"LLA's stapled securities fell 0.2c to 4.6c yesterday but were still well up on the 4c rights issue price which formed the central plank in the recapitalisation plan. The issue, underwritten by Arctic, raised $100 million but it was largely shunned by LLA's existing security-holders. Many of them would still be shell-shocked by the massive drop in value of their holdings since the demise of MFS, which saw their investment in LLA fall from above $1 last year to a low of 3.3c. Original security-holders now own about 10 per cent of the group."

Dear Dora

A share placement is exactly that. It is the issue of new shares, usually below the current market price, either to all shareholders, sophisticated shareholders or selected institution/s. The issue dilutes existing shareholders equity when a company issues shares to other than all shareholders, this is very unfair due to the dilution . In every case that I have personally been involved , the share pricehas fallen in line with the reduction in asset values

Se for example if we become listed and Wellington capital issues 100 million shares at one dollar and then we have a placement of 20 million shares at 80 cents that is what the market value will become for any potential buyer.

Not only that the ASX rules allow these placements and rights issues to be made in a very short space of time you may have only five days to lodge an application for shares (assuming you have any money left ) otherwise the remaining shares will be purchased by another party with its own agenda to gain control of the company at a bargain basement price.

As in the example you have listed above where Arctic Capital (Packer) has gained contol of Living and Leisure for a pittance.

Now you know why i am terrified of listing it is a case of once bitten thrice shy.


Regards Chris

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Wellington Investor Update 9/5/08 :-
Price payable by Wellington for purchasing all the shares in Octaviar Investment Management (which holds 4 other funds beside PIF) is -
4 x actual profit of OIM for the 12 months following the acquisition PLUS the value of the net tangible assets of OIM at the end of the 12 months.
Profit will be ZERO (taking into account all the funds as well as brought forward losses).
Value of Net tangible assets....hhhmmmmm.....what assets will be left and who values them ?? Also, the bank loan (that JH told everyone during her roadshow would be repaid by August), balance remaining has been refinanced. That should nicely offset any tangible asset values.

Burnt, was it net tangible assets of OIM? The way I understand it, NTA of OIM doesn't include any of PIF's assets. It's the assets of the management company like furniture, photocopiers, software licences etc that they own.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

I will check with WC again Gazzan, I was given that info a couple of weeks ago. It was something to do with a time frame of when creditors had to have had lodged the claims.It seems that if in the event that OCV don't have the PTQ removed as trustee and put an end to the wind-up action, they will go into voluntary liquidation. This being the case, OCV will recognize the total amount of PIF debt.

Wow. Thanks Seamisty. That's a v v v important point.

At the BNE forum JH said the $147.5M claims was ranked equal with OCVG, Challenger, OPI, NAB & ATO. (The $50M SF was ranked lower) I'd assumed that meant we'd get a 20% chunk of OCV on wind-up. Seems this assumption might be wrong?

The 'compensation' claim is "on the basis that zero value was received". Anyone know if this action is under a tort or legislation? Federal or State? I might do a bit of legal research.

 

[k.smith]

Re: Octaviar MFS Premium Income Fund PIF

Has anyone heard anymore information about the PWC audit, are they still working on it? And what of the PTQ comeback.....any ideas ?

 

[Rance]

Re: Octaviar MFS Premium Income Fund PIF

I hope i can answer your questain Dora Once the PIF becomes listed it then becomes sort of a company we are then share holders of that company The board will have full control how it is run share holders do not have a say on right issues etc etc But are given first choice to buy extra shares if they which to
Yes i know just what your thinking ////////////

If we list on the ASX or NSX, we list as an income fund not as "a sort of company" and the sellers' parcels are shown as units (which they are!) and not shares. There are many, many IFs listed on the ASX (in a separate area to shares) and a few on the NSX. Holding a majority of units does not mean you can take over the IF.

The opening unit price would be what the sellers are offering followed by hargy-bargy as to what the buyers are prepared to pay (just like shares). Simple dimple.

Rance

 

[great dame]

Re: Octaviar MFS Premium Income Fund PIF

If we list on the ASX or NSX, we list as an income fund not as "a sort of company" and the sellers' parcels are shown as units (which they are!) and not shares. There are many, many IFs listed on the ASX (in a separate area to shares) and a few on the NSX. Holding a majority of units does not mean you can take over the IF.

The opening unit price would be what the sellers are offering followed by hargy-bargy as to what the buyers are prepared to pay (just like shares). Simple dimple.

Rance

Ranch I know that they are bought & sold just lilke shares You know a lot of folk still call shares units too They are not sold in parcels anymore you can buy if you wish just one only unit or as many as you like now days And sell the same way as long as there is a buyer & a seller ////////////

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Has anyone heard anymore information about the PWC audit, are they still working on it? And what of the PTQ comeback.....any ideas ?

Yes k.smith, the PIF is being independently audited at the present time and a detailed report of the results will be presented hopefully before the end of Sept. I am not positive if it is PWC conducting the current audit. Seamisty

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

If we list on the ASX or NSX, we list as an income fund not as "a sort of company" and the sellers' parcels are shown as units (which they are!) and not shares. There are many, many IFs listed on the ASX (in a separate area to shares) and a few on the NSX. Holding a majority of units does not mean you can take over the IF.

The opening unit price would be what the sellers are offering followed by hargy-bargy as to what the buyers are prepared to pay (just like shares). Simple dimple.

Rance

Thanks for that Rance. That's an important distinction.

Page 27 of the PDS (dated 2 July 2007): the RE can issue different classes of units. I'd like to see this scrapped. To make sure current unit holders distributions and rights can't be diluted. So that all unit holders get the same distributions and voting rights.

 

[DoraNBoots]

Re: Octaviar MFS Premium Income Fund PIF

...There are many, many IFs listed on the ASX (in a separate area to shares) and a few on the NSX. Holding a majority of units does not mean you can take over the IF.
...

Thanks Great Dame and Jadel. I think a rights issue is a concern.

In response to the above quote:
The corporations act says you only need a 50% vote to replace the RE so I'd say holding a majority of units would mean you can take over the fund.

 

[Juan Mortyme]

Re: Octaviar MFS Premium Income Fund PIF

And what of the PTQ comeback.....any ideas ?

As someone has mentioned in another forum :

"...there must be more to this story (obviously) than what is released to the media. If I was having a guess, I would be betting on the fact that the PTQ doubt the bonefides of the incoming trustee".

Hmmm.

 

[great dame]

Re: Octaviar MFS Premium Income Fund PIF

Yes k.smith, the PIF is being independently audited at the present time and a detailed report of the results will be presented hopefully before the end of Sept. I am not positive if it is PWC conducting the current audit. Seamisty

Thanks Seamisty You say maybe get the report at the end of Sept. Bloody Hell thats after the big VOTE is taken I can smell a rat its not right i want to know before the vote The unit holders out there are all given a one sided (WC side) in all this mail out Hoping we will all swallow it all Most probelly will sadly Except the ones that think with there heads CHEERS ///////

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

It appears that there may be some good news concerning redemptions. There is another avenue apart from NSX that the WC board has come up which will be revealed to investors next week. It is not just trading between existing unit holders either, it is some other means.

A WC senior staff member today could not (was not allowed to) elaborate any further as the 80+ page PIF amendments document is currently at the printers. We don't have to wait long though, as it will be up on the newpif website Tuesday evening.

The WC board is still considering all offer scenariors from OCV regarding debt settlement which includes some cash now and a longer term settlement over 3 years mix. No deal has been officially struck or finalised as there is still time to the end of this month / early September.

PWC is (still!!) continuing the PIF audit, and although the audit team is no longer in the WC offices, it is completing the task elsewhere.

Not long to go now and hopefully the direction of this fund will be a little clearer. The person I spoke to said that in the information coming to investors next week, they see some positive news for us, and believe it is a great step in going forward. Let's hope so!

 

[selciper]

Re: Octaviar MFS Premium Income Fund PIF

Javier -

Your #1692 is much appreciated. Am tired of the repetitive doom and gloom that seems to have dominated this thread lately.
And hopefully ASIC are busy using their magnifying glasses.

 

[Mutchy]

Re: Octaviar MFS Premium Income Fund PIF

Thanks Great Dame and Jadel. I think a rights issue is a concern.

In response to the above quote:
The corporations act says you only need a 50% vote to replace the RE so I'd say holding a majority of units would mean you can take over the fund.

Hello All,
Please correct me if I am wrong, but I am trying to understand what has happened to LLA and relate that to what may happen to our units if listed on a stock exchange. I am thinking aloud here and maybe it won't make much sense. Let me know if it doesn't.
It seems to me that Packer/Arctic have, for a (substantial) investment of $100 Million achieved 49.3 percent holding of the stapled securities in LLA by issuing rights to shares in Arctic's proportion of LLA at 4 cents each when the value of the stapled security was 4.6 cents. So for 4 cents an investor received 4.6 cents worth per share and immediately made 15% capital gain. The existing security holders did not in the main participate because the poor so-and -sos had no money with which to buy shares and had seen their holding diminish in value even further as the new shares were issued. The value of each security is so low because the stock market considered that there was substantial risk that LLA could not repay previous financing loans from earnings and capital, these loans having been called upon for full payment upon default of due loan repayments. The threat of imminent liquidation prompted the management of LLA to seek refinancing of LLA whereupon Packer/Arctic stepped in with the rescue package buying 49.3 percent of the company. I suppose that the market valuation of the stapled securities did not represent anywhere near the net tangible assets per security and that the NTA per security was in excess of the stock market valuation otherwise Packer/Arctic would not have been interested.
Turning to the situation of the PIF:
Should the units in PIF be listed on a stock exchange (NSX or ASX) I envisage that they will also be stapled to listed shares as a legally allowable means of listing units which can not otherwise be directly listed. The value of these stapled securities will be set by by potential purchasers who will therefore set the value of the stapled securities at much less than the NTA per security (45 cents) and probably much much lower, maybe below 14.5 cents. The value will depend on what the puchaser is prepared to pay for taking the risk of future rewards. If one purchaser or a consortium of purchasers have enough money they can buy as many stapled securities as they can afford at the market value and perhaps buy a controlling interest in the fund but only if enough of us are desperate to sell.
Now how much is a controlling interest and what control does it get them? PIF is not a listed company. It is an Investment Fund and does not itself have a board of directors but a Responsible Entity to manage the fund on behalf of the unit holders. The RE reports to a Trustee who holds the units on behalf of the investors. As we see in the case of Octavia the Trustee can, with good reason apply to the courts to wind up the fund and I suppose perform other duties of which I am unaware. Whilst the shares are listed the corresponding unit is held by the Trustee at arms length and are not directly controlled by the Responsible Entity. As I understand it, 75% of the vote is required to change the constitution or 50% to appoint a new Responsible Entity. Is it likely that one company or consortium is likely to hold enough of the equity in the PIF and hence be able to do what they want with the fund? No. And what changes can they make to a fund to substantially benefit themselves? If they do substantially benefit themselves they will also be substantially benefitting all unit holders because as I understand the PDS all units are equal in benefit. I therefore do not believe it is possible to change the value of some units in preference over other units. To raise finance can the Responsible Entity issue shares at any value? - at a discount to market price? I don't think it would be possible even if the one entity owned 75% or more of the securities. . To do so would require a change to the the Constitution and require unit holder support. Not in any unit holders self interest.
Another fund in which we have stapled securities listed on the ASX a few months before the credit crunch. The RE wanted to change the constitution to introduce a bonus scheme for RE management personnel by issuing securities to them for performance related achievement and as soon as the fund was listed sent out voting papers and argument as to why this bonus scheme should be implemented. Needing 75% of the vote they failed miserably because security holders saw the dilution effect this scheme would have had on the value of the units. If someone or some group has more than 75% holding in PIF they may be able to approve this sort of change but as it is diluting their unit value it would be against their best interests IMHO.
It appears to me that their is no conclusion to be drawn from a rights issue made by LLA because of the different structure of the two entities.

Could I have some considered opinion on this topic please with reasoned logic backed by some understanding of corporate structure, not empty rhetoric by finger happy interjectors.
Mutchy

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

You are 100% correct Mutchy. The way this fund is structured and the vast spread of the 755m + units, it would not only be near impossible, the sheer nature of the fund assets would not attract the Packer type raiders of this world. So the conspiracy theorists out there would have to think of something else to speculate about, as this one is not plausible.

 

[PIFholder]

Re: Octaviar MFS Premium Income Fund PIF

Mutchy,

Thanks for your post. Here's my two cents worth. I hope it helps.

I don't think that the PIF units will have to be a stapled security, but rather can be listed as a unit trust alone. Mirvac PFA Diversified Trust (their code is PFD) is listed on the BSX and is a unit trust like PIF, but not a stapled security.

I agree that it is likely not possible to change the value of some units in preference over other units. All unitholders have to be treated equally by the Fund in the Fund's dealings - this is something that JH was harping on at the Melbourne forum in relation to the hardship cases. My skant knowledge of the law is that you can't do something that creates a preference over some units to others, otherwise this becomes a fraud on the minority issue.

Hope this helps. Everyone company/fund is subject to takeover, even if they are not listed on a stock exchange. But to buy the units/shares to have an effective takeover, there needs to be willing sellers.

Cheers
PIFholder

 

[simgrund]

Re: Octaviar MFS Premium Income Fund PIF

RE Sunday 17th Sydney AG meeting at Coogee Bowling Club

Could those planning to attend prepare and bring along some structural prosposals for concrete actions from which we could quickly select the most appropriate ones.
I think we all agree this could assist Zixo and others in more practical use of the time available to us.

Regards to all

 

[Jadel]

Re: Octaviar MFS Premium Income Fund PIF

Sorry Mutchy but this is just a trigger happy reply by somebody who has actively been involved with shares for the last twelve years after a premature retirement.

I have never owned a listed company that did not initially lose value with a rights issue or Placement

And in many instances that dilution in value is permanent.

I got caught with a company called Sundowner twelve years ago that listed at a Dollar and was taken over .

The new owner called a Rights Issue underwrote the issue himself with a deadline of five days and picked up most of the company for 20cents I don’t think its trading for much more today .

There is another story when you trade on the stock market other than corporate structure and law . Its called sentiment , fear and greed

King & Co wanted to Raise 500million dollars when the Companys price was $4.00 with a Rights Issue and we all know the sequel to that story

Theoretically the Corporate exploitation and abuse that has taken place should never have occured

It does not bother me one iota whether or not another company would wish to or can take over our Fund if we have a Rights issue or Placement it will dilute the value of the assets for existing investors.

 

[DoraNBoots]

Re: Octaviar MFS Premium Income Fund PIF

The DVD of the Melbourne forum is being sent to us at the moment. I found the second half of the DVD which is question time very informative and have made an index for myself so I can easily find the info I want in the future. I've attached in case others find it useful. This is just my interpretation of the session and not a transcript.