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

CROMWELL CALLS FOR FULL DISCLOSURE FROM INVESTA

CROMWELL Property Group (ASX:CRM) has claimed Investa Office Fund (ASX:IOF) has not disclosed material information ab...

FRAUD CAUSES SILVER CHEF PROFIT SLIDE

EQUIPMENT financier Silver Chef (ASX:SIV) has seen its half-year profit slide due to fraud.

The Brisbane company r...

MEGAPORT QUADRUPLES REVENUE AND INVESTS IN EXPANSION

MEGAPORT (ASX: MP1) increased revenue 345 per cent to $4.46 million in the six months to 31 December 2016, the com...

IN-STORE VETS BOOST GREENCROSS' PROFIT

GREENCROSS Limited (ASX: GXL) shares lifted 5 per cent in trading today after the Brisbane-based company posted a ...

Related News

WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES

EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent prem...

RISE OF THE MACHINES HAS WORKERS SWEATING

UP TO 3.8 million Australian workers are fearful their job may soon be terminated by a robot, a new survey has shown....

LESS TALK, MORE SMALL BUSINESS ACTION IN 2017

THE future growth and prosperity of Australian SMEs could be undermined if governments lose sight of the sector...

TEST DRIVE A POST GRAD AT BOND

THERE'S only one way to really move your career into the fast lane, says Bond University, and 'test driving...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter