City Pacific slashes more than a third off value

Written on the 12 May 2009

 

CITY Pacific has carved more than 39 per cent off the value off its First Mortgage Fund.
With the $339 million write down its $1 units are now worth 61 cents.
The bid to remove City Pacific Ltd as the trustee of the City Pacific First Mortgage Fund CPFMF has intensified with the launch of Investaguard Ltd, to be wholly owned by unit holders of the fund.
The First Mortgage Fund has had both redemptions and distributions frozen since mid last year. The FMF has $920 million in outstanding loans to 52 borrowers.
A shareholder meeting to have fees halved to three per cent resulted in a fee decrease of just .5 per cent to 2.5.
Investaguard director Peter Willson, says the former small mortgage fund will enact a Supreme Court bid to have current management of the fund ousted.
“This fund has been beneficially set up by the unitholders,” says Willson.
Investaguard has cited what it believes to be irreconcilable conflicts of interest City Pacific has as trustee for the fund.
Investaguard says almost one third of all money lent out by the fund has been to City Pacific related parties and those loans are now substantially in default.
“What makes the situation even more untenable is that City Pacific continues to charge significant management fees for the management of loans to its related parties which as far as we are aware seem to be all in default,” says the lawyer representing Investaguard Robert Hynes.
“Investaguard will, similar to a stapled security, be 100 per cent beneficially owned by the current unit holders in the City Pacific First Mortgage Fund thereby aligning everyone’s interests, internalising the management and significantly reducing the operating costs of the fund.”
Hynes notes that City Pacific’s December half yearly financials disclosed that it is currently in breach of its Australian financial services license conditions and that there are substantial issues concerning its viability to continue as a going concern.
City Pacific chief executive John Ellis is confident that unit holders will stick with him following the latest shareholder meeting. But he is concerned that both Investaguard and another proposed takeover by Trilogy Capital will encourage a fire sale of assets.
City Pacific owes the Commonwealth Bank $200 million.

Latest News

ADELAIDE APARTMENT BREAKS OFF-THE-PLAN RECORD WITH $3M SALE

AN apartment in 'The Adelaidean' residential development in Adelaide has sold for more than $3 million, which...

CABCHARGE GIVEN GREEN LIGHT TO BUY YELLOW CABS IN QUEENSLAND FOR $20M

THE consumer watchdog will not oppose the proposed acquisition of Yellow Cabs in Queensland by taxi payment service C...

SLEEPING ROUGH IN THE NAME OF CHARITY: 170 BRISBANE BUSINESS LEADERS TAKE PART IN THE CEO SLEEPOUT

OVER 170 Brisbane CEOs and business leaders will brave the cold tonight to fight homelessness in what will be the big...

DOMESTIC TOURISM IN AUSTRALIA BREAKS RECORDS, INJECTS $61.7 BILLION INTO NATIONAL ECONOMY

DOMESTIC Australian tourists have spent a record breaking $61.7 billion on intra and interstate travel this year, acc...

Related News

DOMESTIC TOURISM IN AUSTRALIA BREAKS RECORDS, INJECTS $61.7 BILLION INTO NATIONAL ECONOMY

DOMESTIC Australian tourists have spent a record breaking $61.7 billion on intra and interstate travel this year, acc...

THE DOCTORS WHO PLUNGED INTO THE SHARK TANK AND SURVIVED WITH A $500,000 INVESTMENT

THEIR mission is to change the face of cancer care with an app that empowers and connects patients and care givers...

IMF BRACES FOR BIG LOSS FOLLOWING WITHDRAWAL FROM SPOTLESS CLASS ACTION

LITIGATION fund IMF Bentham (ASX: IMF) is set to lose as much as half a million dollars after it ceases funding one o...

WAGERING GIANTS TABCORP AND TATTS GIVEN GREEN LIGHT FOR $11B MERGER

THE Competition Tribunal has approved Tabcorp's (ASX: TAH) $11bn takeover bid for Tatts (ASX: TTS) on the conditi...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter