Q&A Friday is published every Friday while there is demand. Email your questions to vern@vov.co.nz. We won’t publish your name.

Legal Case Against Vestar

Question: Can anyone give us any information regarding the class action against Vestar by Lawrence Herzog?

Vern says: Lawrence Herzog emailed an update to participants today. However, there are 27 participants for whom Lawrence has no email address. If you are one of those, please contact vern@vov.co.nz or write to: Victims of Vestar sub-group, c/o EUFA, PO Box 8021, Cherrywood, Tauranga 3145.

The former directors and members of the Vestar investment committee were served with proceedings early last year. As expected, they all filed statements of defence denying any liability.

An initial Court conference to set procedural guidelines and timetable orders took place on 29 July 2009, and there have been various conferences and applications since then.

Mr Herzog says a preliminary hearing on the Vestar test case is now set down to be heard by the High Court on 1 November 2010. The purpose of this preliminary hearing is for the Court to make a binding decision on the validity of the case against Vestar directors and members of the investment committee.

Success in the preliminary hearing is a necessary step in the process towards a final Court hearing, which will ultimately determine the final outcome.

Radius

Question: Has there been any further development on the progress that was projected at the September 2009 meeting? Have the new directors been able to get to the heart of the problems in the businesses? Have they been allowed to exercise any real changes in order for us “victims” to get our investment released?

James says: Sandy Maier, the chairman of Radius Properties Ltd, released a letter on 14 July 2010 updating shareholders on progress to date. Click here for a PDF of the letter (or right click and select “Save Target As…” to download).

The letter deals with the historic nature of what was found after Ascot Capital Management (David Glenn) became the manager and gives details of the various settlements he has negotiated.

According to the letter, the Board believes the net asset backing of each RPL share at the time they assumed control was approximately $0.36 per share. This is the Board’s unaudited assessment of value at 10 November 2009.

The current value per share will be announced after the 2010 audited accounts are completed in August. However, I am told the new manager’s negotiations and activities have removed large liabilities that will see the value per share increase materially above 36 cents.

Where Are We At With All The Failed Companies?

Question: Thanks once again for all the hard work – it is appreciated. Like most Vestar clients, we have a bunch of “investments” in finance companies which are either in moratorium or receivership, and others in companies like Radius and Clendon that have no market or are in perilous situations. I find it very difficult to keep track of their status. Some, like OPI for instance, have been silent for many months. Would it be possible to produce a summary of these companies with a description of their current standing (in moratorium, in receivership, etc)?

It is also difficult to reconcile capital repayments, so I wonder if James could also devise a summary of repayments already made, and where available (like St Laurence) the projected final return range? We are probably getting close to the time when most of us will have a picture of how much we have lost forever! I’m not sure I want to know, but still… Thank you again.

James says: A good question – it’s hard enough for me to keep on top of so must be very difficult for you. I suggest all readers leave a comment below with the companies you would like commentary on (a straw poll if you like) and I will collate the information starting with the most requested companies.

Finance Company News

James says: Here are some items of relevance that have come across my desk recently…

Criminal Charges – North South / Dominion Finance
The Securities commission has laid criminal and civil charges against the directors of Dominion Finance and its sister company North South Finance. They are accused of misleading investors by misrepresenting their financial position and risks. Dominion Finance was put into receivership in 2008, owing $176.9 million to 5,900 investors. The receiver told investors in its March update they can expect repayments of between 10 cents to 25 cents in the dollar. North South avoided receivership after its trustee agreed to an orderly supervised wind down of their book.

Significantly one of the directors, Vance Arkinstall, is chief executive of the Investment Savings and Insurance Association (representing the main funds management companies) and past chairman of the nominating committee for New Zealand Superannuation Fund Guardians. Other directors charged are Richard Bettle a director of listed company’s Goodman Property Trust, Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale.

Irongate bonds to pay out – Formerly St Laurence Property and Finance
Relief for all when Irongate announced that it has agreed binding terms with a consortium led by Bluestone Group. The consortium is to provide $45 million in new funding, which will allow Irongate to repay in full its Series 1 and 2 Bonds, scheduled to mature on 15 July 2010.

Lombard may increase interim distribution
The receiver now has sufficient funds to pay a further interim distribution of 2.5 cents in the dollar to secured debenture investors. They are currently working through a recovery process which could increase the interim distribution to up to 5 cents in the dollar. They are delaying the issue of the next report until on or around 12 July 2010 this report will confirm the next interim distribution.

ING Diversified Yield Fund (DYF) and ING Regular Income Fund (RIF) – who gets paid?
The commerce commission is determining the payment method by the 19th of July, payments to be made within 90 days of the 22nd of June.

ING says: “The Commerce Commission has raised a number of issues as a result of its investigation, but has acknowledged that these issues remain untested from a legal perspective. While we do not agree with all of the Commission’s views, we agree that it is in the best interests of investors to avoid a lengthy court process, with an uncertain outcome for all.”

The Deed of Settlement regarding Commerce Commission Investigation into ING Diversified Yield Fund and Regular Income Fund says: “By this Deed, ING (NZ) and ANZN acknowledge that some of their conduct may have breached the Act and agree to make further payments to eligible investors (further payments).” … and… “ING (NZ) and ANZN acknowledge that some, though not all, of their conduct in relation to the funds may have contravened sections 10, 13(a), 13(b) or 13(e) of the Fair Trading Act 1986.”

Eligible investors are under the deed means: “Eligible investor” means all persons and entities who invested in the DYF and/or RIF and suffered loss arising from that investment and have not already received 100% of the amount invested by them back from ANZN and/or ING (NZ). For the avoidance of doubt this includes only those investors who held units at the date of suspension of the funds on 13 March 2008 (the suspension date).

About James Usmar

James Usmar joined Saturn Portfolio as an investment adviser after immigrating to New Zealand in 2006. He was a qualified financial planner in the UK working for a tax consultancy firm, where he specialised in investments through financial centres such as Jersey and the Isle of Man.

About Saturn Portfolio

Saturn Portfolio is an investment advisory firm built on a history of trusted advice since 1988. They invest $160 million on behalf of clients. Four experienced client advisers work in the business. Saturn Portfolio is not aligned to any investment manager or product provider. This means they can freely select and recommend the most appropriate investments for you.

Their process is to discover and discuss your current situation, goals and investment knowledge. Once they assess your needs they give you a written plan, which they discuss with you and clarify any queries. They do not implement the recommendations until you give approval to proceed.

Importantly, Saturn Portfolio’s sole source of income is the fee you pay to them. They do not take any commission or brokerage from product providers. www.SaturnPortfolio.co.nz

Tags: Ann Butler, ANZ, Ascot Capital Management Ltd, Bluestone Group, David Glenn, Dominion Finance, Goodman Property Trust, ING Diversified Yield Fund, ING Regular Income Fund, Investment Savings and Insurance Association, Irongate, Lawrence Herzog, Lombard Finance, New Zealand Superannuation Fund Guardians, North South Finance, Paul Forsyth, Radius Properties Ltd, Richard Bettle, Robert Barry Whale, RPL, Sandy Maier, St Laurence Property and Finance, Terence Butler, Vance Arkinstall, Vestar

This entry was posted on Friday 16th July 2010 and is filed under Q&A Friday. Both comments and pings are currently closed.