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A war of words has erupted between LM Investment Management (LMIM) and predator Trilogy Capital Group in the wake of voluntary administrators being appointed to LM today.
Peter Drake (pictured), founder and head of the Gold Coast-based LMIM, says a near year-long campaign by the Sydney-based Trilogy had taken its toll on the fund manager.
In the fallout, there are understood to have been a number of resignations in LMIM’s senior ranks over the past week, although this has yet to be confirmed by the company.
“We have been on the receiving end of Trilogy’s relentless 10-month campaign of alarming and misleading statements to our domestic and international advisers and investors,” Drake says in a statement.
“This has impacted the liquidity of our funds, and therefore investors’ interests.”
Drake says the campaign has been heightened by the strong Australian dollar “resulting in excess margin requirements for the funds very recently”.
But Trilogy chairman Rodger Bacon tells Gold Coast Business News that he is not as powerful as Drake claims.
“He now has us lined up for affecting the Australian dollar against the LM funds,” Bacon says.
“I am intrigued by the amount of power I have.”
Bacon says any campaign against LM, which included exposure in a Four Corners program last week, is “not just Trilogy talking”.
“There are some real problems,” he says.
Bacon says Trilogy took a tilt at controlling LM’s funds after it was approached by concerned investors.
“At this stage we are still concerned and the investors we are talking to are very concerned,” Bacon says.
He says the voluntary administration move came as a surprise to Trilogy, but says Trilogy remains determined to be appointed responsible entity to a number of LM’s funds.
Meanwhile, LMIM says the voluntary administration will not impact on the funds managed by the company.
Voluntary administrators John Park and Ginette Muller, of FTI Consulting, are conducting a review of the LM business and the funds it manages. They say they will update unit holders as a “matter of priority”.
LMIM has $3 billion in funds under management, including investments from offshore investors.
The company took a hit late last year when Trilogy took control of LM Wholesale First Mortgage Fund in November.
Trilogy has since set its sights on taking control of LM’s remaining funds, as it had done previously with City Pacific’s First Mortgage Fund.
Drake makes the point that administration process is “not liquidation or receivership, and neither LMIM nor any of its funds are in liquidation or receivership”.
Bacon also says that Trilogy does not want to see a receivership as it is a “last gasp” that “destroys value”.
Drake says voluntary administration is the appropriate response in the circumstances, and the move is aimed at protecting the funds it manages.
“Had we not acted, this perfect storm of impacts meant we may have been unable to meet our obligations,” he says.
“The funds will continue to be managed in accordance with their governing documents and the applicable Corporations Act and Trustee Law.
“The FTI team will be working with LM’s senior investment personnel to optimise outcomes for all stakeholders.
“The funds are unit trusts, the assets of which are quarantined from those of LM.
“The ultimate aim of the voluntary administrator is to manage and resolve a solution over a period of time.”
A hotline has been established for unit holders at 1300 851 395 for Australia callers and at +61 2 8767 1283 for international callers.
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