Wellington Capital PIF/Octaviar (MFS) PIF

[Rance]

Re: Octaviar MFS Premium Income Fund PIF

Is it one vote per unit holder regardless of how many units you have .Also do your units remain the same $1 per unit if so the proposed 3cents a unit paid quarterly is more than MFS paid ? I am really confused wre is all the money coming from

Waleroo

1 unit = 1 vote

My understanding is that distributions will be 6 cents per unit per annum paid 1-1/2 cent per unit per quarter.

Rance

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Thanks Duped. I deleted it by mistake. Would be great is you can answer.

Could someone please explain clause 23.4.1. I'm wondering if it is saying that if 23.3 is not valid (i.e. WC Ltd is not RE) then the RE (any RE) will get the 2% mentioned in clause 23.3

It's common for contracts to have clauses that basically say: if any one clause is illegal/invalid/unenforcable then it doesn't mean the whole contract is dead.

The way I read clause 23.4, WC is saying: if WCL can't get away with clause 23.3 (e.g. if it is unenforceable because it contravenes the Corp Act) then we want clause 23.4. I.e. if we're not allowed to sell assets to get our 2% exit fee before our last day on the job then we want the RE that's replacing us to pay us the 2% within 60 days. Grammer of 23.4 is a bit torturous but 'or otherwise at the discretion of Wellington Capital Limited' appears to be saying that WC can choose the latter of the two options. The valuation methods in 23.3. and 23.4 are different so the latter option might end up being more profitable for a sacked WCL.

It's a guess but perhaps WC are concerned enough about the enforceability of clause 23.3 that they felt it best to have a back up clause.

Like with the $50M SF and Incentive based remuneration we voted yes for in 2006, who knows how these clauses really work in practice. Has a fund with an RE retrenchment clause like this ever sacked it's RE in Australia? My guess is, probably not.

Think of it as retrenchment payout. Is 2% that extreme? I don't know. Wasn't long ago that fund exit fees this high, paid by investors, were the norm wasn't it?

Of greater concern to me is the quorum limitations. The old provisions were generous to us unit holders but the new provisions may have swung too far the other way. But would we really use these provisions. Look at how generous the provisions are now and what we're going through - have any of us called a meeting? No. Just food for thought.

Can any of you finance people tell me if 'gross value' means assets minus debts? Last thing I want to see is a clause that encourages an RE to load up the fund with debt to increase the 'gross value'.

 

[newwwtrader]

Re: Octaviar MFS Premium Income Fund PIF

Hi

I am not invested in PIF, but I do have some friends who are, therefore, I do keep a bit of an eye on what is happening in relation to this. And i do enjoy reading the internet stock forums (for entertainment and educational purposes)

I truly do feel for all who have invested in this. In my opinion you are caught between a rock and a hard place with the decision that is being forced upon you.

I would just like to make the following comments in relation to the matter.

Wellington Capital has made the statement that the units are worth approx 45 cents. This is apparently, correct me if I am wrong, the NTA of the fund. In the documentation issued, they point out that, if and when they do commence trading on the NSX there maybe a downside. I am of the opinion that this downside for a period of time will be massive. I feel that if you compare the PIF to other listed entities it shows how much of a massive shortfall there could be. For example, Centro Properties, I believe they have a NTA of more than $1.20 (conservatively estimated), the shares in that company are currently trading at about 25 cents.

Using this as a basis, how high would the NTA have to rise to for unitholders to be able to achieve the 45 cents, let alone the $1 initial investment.

My friends keep on about the buy back that has been proposed. On the surface this seems very attractive, but as has been pointed out here, how much is it really worth. Lets be honest, everyone is going to want a piece of that. So assuming that a large % adopt that, how many units will each person really be able to sell.

Another concern that I have in relation to the PIF is going forward, what is it going to do. Its total funds are when compared to their competitors very small. A fear that I have for the holders is that down the track there could be a capital raising required. If this happens, I would think that your interests could be diluted (if you dont contribute). I believe this happened with Living and Leisure. In the long term this could be good as it enables the fund to grow, but in the short term it would maybe be not so good.

The advice that I have given my friends is that it really depends on when they want to exit. I feel listing and liquidation would be the same result in terms of funds returned. The only difference is obviously you can access the money from the 19 Sept (if it lists then). But I feel it could fall below 10 c. Great investment if you can pick it up at that, but not so good if you invested at $1.

If they are prepared to hang in for the long term then maybe its not as bad. JH does have a good track record and could maybe grow it given time and funds.

The question I ask myself is why is JH doing this. The goodness of her heart? The 2% fee?

In the back of my mind I have a concern that the listing could be a way to recoup losses made by others as a result of the collapse of OCV. Afterall its not such a bad investment if they can pick up you interests for less than 10 cents when they may get a return of 6c pa. Because lets be honest a lot of the PIF investors need the money badly and will take whatever they can get.

 

[Mary Lynch]

Re: Octaviar MFS Premium Income Fund PIF

Can someone tell me.....is it possible for me to sell some of my units to a friend, and have their name put on them?

Also, why is it that the units will go for so little on the NSX. Surely the 6% (for a ?20c unit picking up interest as tho it is $1) that will be paid (tax free initially) will be an ENORMOUS carrot. I know I would certainly be after them, if I had some spare cash.....and I will be telling everyone I know who is shifting their $$ around at the moment that they HAVE to be a good buy.. Surely that will push the price up. Who cares how slow it is on the NSX...if there's money to be made there will be plenty of takers.

 

[newwwtrader]

Re: Octaviar MFS Premium Income Fund PIF

Why I feel it will get hammered on the NSX is due to the huge number of possible sellers. I believe there are about 770 million units. I feel there is a significant amount of investors who just want out of this for various reasons. So there are a heap of sellers and relatively few purchasers, given the negative image of the PIF and the fact that it is the NSX and not the ASX.

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Can someone tell me.....is it possible for me to sell some of my units to a friend, and have their name put on them?

Also, why is it that the units will go for so little on the NSX. Surely the 6% (for a ?20c unit picking up interest as tho it is $1) that will be paid (tax free initially) will be an ENORMOUS carrot. I know I would certainly be after them, if I had some spare cash.....and I will be telling everyone I know who is shifting their $$ around at the moment that they HAVE to be a good buy.. Surely that will push the price up. Who cares how slow it is on the NSX...if there's money to be made there will be plenty of takers.

Mary, I think it is called an off market trade. I bought my mums Westfarmer shares off her when she didn't want to take up the offer. She got the forms of her accountant but you can download them off the net. Seamisty

 

[seamisty]

Re: Octaviar MFS Premium Income Fund PIF

Can someone tell me.....is it possible for me to sell some of my units to a friend, and have their name put on them?

Also, why is it that the units will go for so little on the NSX. Surely the 6% (for a ?20c unit picking up interest as tho it is $1) that will be paid (tax free initially) will be an ENORMOUS carrot. I know I would certainly be after them, if I had some spare cash.....and I will be telling everyone I know who is shifting their $$ around at the moment that they HAVE to be a good buy.. Surely that will push the price up. Who cares how slow it is on the NSX...if there's money to be made there will be plenty of takers.

http://www.sraa.com.au/forms/form23.pdf here is the website for the form TRANSFER FORM FOR NON-MARKET TRANSACTIONS. Seamisty

 

[Dexter]

Re: Octaviar MFS Premium Income Fund PIF

Mary,

Transfer forms are available free of charge from Perpetual.

 

[Duped]

Re: Octaviar MFS Premium Income Fund PIF

Can someone tell me.....is it possible for me to sell some of my units to a friend, and have their name put on them?

I asked one of the Wc staff at the BNE forum and the answer was yes.

Following is not finncial advice:

Question is: what price do you want to or more importanly can you put on them. Do you want to maximise your capital loss and hence maximise your friend's capital gain or minimise your friend's capital loss; or vice versa? Next question: how much can you push the ATO. It would be great to know. Can you transfer ('sell') the units for $1 each or alternatively 1c? I don't know. What about 65c, 45c and 14c? What about the NSX sell prices?

I searched the ATO website for 'MFS', 'Octaviar' and 'Premium Income Fund' and found nothing so there doesn't appear to be a 'fact sheet' for us, probably never will.

There's stacks of info on http://www.ato.gov.au/individuals/pathway.asp?pc=001/002/026&mfp=001/002&mnu=1051#001_002_026 but I haven't been able to find anything that says the sales price has to be a fair amount. Anyone know? I might give the ATO 1 3 number a call tomorrow.

 

[Burnt]

Re: Octaviar MFS Premium Income Fund PIF

There are a lot on unitholders who do not have access to the internet and cannot be involved in the discussions and information sharing that we are involved in. Time is critical. WE NEED TO GO TO THE PRESS. If each organised Action Group can hold a meeting in the very near future and agree on a statement to be issued to their local press so that as many unitholders as possible are informed of the issues raised on this forum before the voting deadline, it would be helpful to everyone.
It would be wonderful if we could publicly state our agreed upon opinions and let everyone know. Every unitholder needs to be informed (Wellington are not disclosing the full facts), even if it is only given as an opinion, it may be enough to make everyone think twice before voting.
In my personal opinion, we should encourage everyone to only vote for the buy back proposal at this stage. Surely we can organise this. Get in touch with your local AG group !!

 

[DoraNBoots]

Re: Octaviar MFS Premium Income Fund PIF

Dora, are you going to be contacting WC today to get them to explain the anomaly in the two documents. Surely this is serious enough to warrant a major announcement by WC to all investors to clarify which is correct. I will send an email to get a copy of the actual constitution.

Hi Javier,
I will be talking to WC tomorrow and will ask about the difference between the two documents. The EM says “This part of the Constitution will have a practical effect only if Resolution 1 and Resolution 3 are both passed.” So perhaps the additions shown in the constitution will only occur if both resolutions are passed. Will check tomorrow.

Thanks Duped for your info on the 2% RE removal fee.

 

[Javier]

Re: Octaviar MFS Premium Income Fund PIF

Thanks Dora, I actually sent an email today for someone there in particular to call me. They were either too busy or not there today. They're answering machine 'hotline' must be working overtime. Either way let's see who gets the info first as this ambiguity erks me.

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

Regarding voting for "Resolution 3" "Appointment of Wellington Capital Limited as responsible entity":

I received a call back from a WC staff member saying that she passed it by the WC legal team and she confirms that if we vote "No" against WCL as responsible entity we actually will save the 2% removal of RE fee.

 

[Burnt]

Re: Octaviar MFS Premium Income Fund PIF

Hi Dora,
Just a note to add to Duped's answer to your queries re 23.3 and 23.4.1 & 23.4.2 in the proposed constitution amendements. The valuation "methods" are not different, it is the "timeing" of the valuations that is different.Under 23.3 it is the valuation (gross) as per the last audited accounts and under 23.4 it is the value (gross) as at the date of removal of the RE. This could be a big difference depending on when they are sacked !
Also, my understanding of "the gross value" is the stated value without deducting any liabilities.
If it is at WC's "discretion" as to whether or not to apply 23.3 or 23.4 then it gives them even more power to apply the best valuation to determine their termination fee !
WHO'S INTERESTS ARE THEY LOOKING AFTER ????
It basically means, "if we stuff you guys and you wake up to it, we're still laughing".

 

[breaker1]

Re: Octaviar MFS Premium Income Fund PIF

WC, The Action Group or any new RE, can't restore the actual capital stolen from the PIF by fiat, so, looking on the bright side:

Item 1.3 of the Memorandum says: "A 3 cent cash payment will be made to Unitholders, with the first payment in October 2008, the second by 24 December 2008 and quarterly thereafter". By quarterly, they mean 1.5c / qtr. And that's $3,000 by December for an investment of 100,000 units folks!

6c/unit, per year @ 45c in $ = approx 13% p.a. interest - don't want to spruik WC, but on what's left in the fund, 45% (over 3 years rebuild), that's not too bad. If you got 45% of your money back now, where could you get 13% on that same money? You know this works out about 2-3% less, than we were getting before on 100% of our investment @ 8-9%. Now, don't forget any special distributions if finances allow, that might actually bring it near % p.a. what it was before. You should deduct inflation, but inflation was always eating away at our lump sum. Seriously, if you had access to your money right now, would not most be looking for interest with it and still leaving it tied up in some institution?

The real losers, as I see it, are investors that want to access their capital [for home renovation, moving house, new car, medical expenses, nursing home, etc.] in a reasonable time frame [1-4 years]. After reading "newwwtraders" comments I have become even more confirmed that we will get less than half of NTA PIF value on the NSX and for capital access that is very disturbing. But if we can access other invested monies from our other investment institutions to cover capital requirements, then our over-all interest-distribution-income, will not have varied much to what you would have been getting prior to the PIF debacle.
For example:
Previously: $100,000 invested in MFS PIF @ 8% pa = $8,000 pa total

Now: $45,000 [45%] invested in WC PIF @ 6c/unit x100,000 units = $6,000 pa + any special distributions as money becomes available, say 1.5c/unit ($1,500) = $7,500 pa total. Then add to that any Centrelink savings you are making because you are now being deemed @ 45% of your former assets, not @ 100%, which to my calculations, based on the income test for a couple, gives you about another 1% [$1,000 pa] on your prior $100,000 investment (saved via C/L paying you more pension) = $8,500 pa total. The same income, if not a fraction more, than before!

An optimistic view I know!

Try this encouragement - an email from a PIF creditor I accidentally put in our AG under:

"Dear Breaker1,

I wish to inform you that I initially attended the action group meeting as a creditor, not as an investor to find out why we had not been paid for 3 months on Aston Hill project, and to what course of action to take. From what I have gathered to-date is that Jenny Hutson seems sincere. After listening to the situation, we were informed that we would be paid late July, early August once RBOS loan was repaid. All subcontractors have been now paid, and works will recommence on these quality apartments. Whether they realise their value in the current climate, it is not for me to say, however my understanding is that these assets are trying to be salvaged from being sold in a fire sale thereby realising a greater return for investors.

I certainly will be following this situation, as I most probably will become an investor once listed. In the interim, I wish each and every investor the absolute best and am saddened by some of the stories I have heard and hope you resolve this matter to your satisfaction.

Thank You, "
This shows JH is definitely going about restoring reputation and some value to the Fund. Further, it evidences that the PIF is not broke and paying its bills [something MFSIM was NOT doing].

Hope I partly cheered some!

 

[great dame]

Re: Octaviar MFS Premium Income Fund PIF

Waleroo it is my understanding that 1 vote per =1 unit, the more units you have, the stronger the vote. WC is hoping to rebuild the value of the unit from the current estimated 45cents per unit back to the original value of $1.00 per unit over a 3-5 year time frame.The distributions will come from a combination of income and capital until such times as the Fund is stabilised, the capital component is meant to be re paid to strengthen the unit value when existing projects are completed and sold. Seamisty

Gee whiz Back to a $1 ?? on the exchange that will never happen it would have to grow by 500% in 5 years time maybe in50 years time JH is not giving ny forcasts only hope And thats not good enough // The Dame ///

 

[DoraNBoots]

Re: Octaviar MFS Premium Income Fund PIF

Can we look at the numbers WC have said they will achieve over the next 3 to 5 years. I’m going to pretend the valuations we have been provided reflect the state of the fund and would like to hear comments.

The PIF is worth 413,747 (page 22 EM) but I think there is still a $20mill bank loan so lets say 393,747 mill. The portfolio currently consists of 66.71% commercial loans, 3.75% cash and 3.75% fixed interest securities. (pg 28) We know over 70% of the fund (comm Loans, cash) are not producing more than 11% return and produce no capital growth. This leaves less than 30% of the fund to return over 16% and achieve a growth that allows the entire portfolio to double in size in 3 to 5 years. I’ve said over 16% because you have to make up the shortfall in interest the cash and comm loans are not returning and also have to return at least 1.5% of the entire fund for expenses.

If anyone can explain how this is possible I would be grateful. I think Duped has been wondering if the high returns MFS shareholders were getting were coming out of capital, perhaps WC have picked up the same strategy. Another thing that bothers me is that if WC achieve their goal of restoring the unit value back to $1 at some point we have no guarantee that the 6 cents per unit will go up. So at that point we might only be getting a 6% return on the NTA value, and who knows what the price on the NSX will be.

I think to get the stated returns you'll have to gear the fund but JH said debt would only be used for short term if necessary. I do note though that pg33 says "the fund may have a gearing level of up to 20%":crap:

Another thing. I don't like the idea of new investors buying in at 10 cents and getting paid distributions out of our capital while the fund is recovering. (Assuming Seamisty is correct)

 

[great dame]

Re: Octaviar MFS Premium Income Fund PIF

Why I feel it will get hammered on the NSX is due to the huge number of possible sellers. I believe there are about 770 million units. I feel there is a significant amount of investors who just want out of this for various reasons. So there are a heap of sellers and relatively few purchasers, given the negative image of the PIF and the fact that it is the NSX and not the ASX.

Well what do you know somebody is reading my thoughts Thanks Newwwwtrader For that //The Dame //

 

[DoraNBoots]

Re: Octaviar MFS Premium Income Fund PIF

...
Item 1.3 of the Memorandum says: "A 3 cent cash payment will be made to Unitholders, with the first payment in October 2008, the second by 24 December 2008 and quarterly thereafter". By quarterly, they mean 1.5c / qtr. And that's $3,000 by December for an investment of 100,000 units folks!
...

I agree JH has 'said' she plans to give us 1.5 cents quarterly but this is NOT written in the EM.
The EM says:
"A 3 cent cash payment will be made to Unitholders, with the first payment in October 2008, the second by 24 December 2008 and quarterly thereafter".
This says there will be quarterly payments of some kind but does not say how much will be paid.
If you want to assume this is giving an amount for the next quarter it looks more like it would be 3 cents but we not that isn’t the case.

And don't forget the Risk section of the EM says this:
4.4 No Cash Payments
"While in the past Unitholders in the Fund have invested on the basis that cash payments will be made to Uniholders at various rates, in the current circumstances the RE anticipates being in a posistion to pay 3 cents per Unit by way of cash payment by 24 Dec 2008."
Again no mention of what we will be paid in the future.

 

[great dame]

Re: Octaviar MFS Premium Income Fund PIF

Can we look at the numbers WC have said they will achieve over the next 3 to 5 years. I’m going to pretend the valuations we have been provided reflect the state of the fund and would like to hear comments.

The PIF is worth 413,747 (page 22 EM) but I think there is still a $20mill bank loan so lets say 393,747 mill. The portfolio currently consists of 66.71% commercial loans, 3.75% cash and 3.75% fixed interest securities. (pg 28) We know over 70% of the fund (comm Loans, cash) are not producing more than 11% return and produce no capital growth. This leaves less than 30% of the fund to return over 16% and achieve a growth that allows the entire portfolio to double in size in 3 to 5 years. I’ve said over 16% because you have to make up the shortfall in interest the cash and comm loans are not returning and also have to return at least 1.5% of the entire fund for expenses.

If anyone can explain how this is possible I would be grateful. I think Duped has been wondering if the high returns MFS shareholders were getting were coming out of capital, perhaps WC have picked up the same strategy. Another thing that bothers me is that if WC achieve their goal of restoring the unit value back to $1 at some point we have no guarantee that the 6 cents per unit will go up. So at that point we might only be getting a 6% return on the NTA value, and who knows what the price on the NSX will be.

I think to get the stated returns you'll have to gear the fund but JH said debt would only be used for short term if necessary. I do note though that pg33 says "the fund may have a gearing level of up to 20%":crap:

Another thing. I don't like the idea of new investors buying in at 10 cents and getting paid distributions out of our capital while the fund is recovering. (Assuming Seamisty is correct)

Dora my friend your forgetting our great leader JH is the Warren Buffert of Australia And all her loyal followers believe she can do the impossable Whats that they say about being lead down the garden parth ???? The Dame ///