Equititrust?

Equititrust said:

It is not unusual in our industry to have recalcitrant borrowers attempt to cause damage to Equititrust’s reputation by making untrue or ill-conceived allegations against us. The common thread of such accusations tends to be that they are only ever made anonymously and when invited to discuss their issues directly with Equititrust the invitation is never taken up yet the accusations continue. By way of example, “Kostag” has been invited on numerous occasions to contact me yet he has declined to do so. Instead he continues to make unsubstantiated or erroneous allegations. I do not intend to further address matters raised by him on this forum.

In relation to the comments of zencorp (who incidentally has just joined the website and does not state whether or not he is an investor but states he has knowledge of our loan documents which may suggest he is in fact a borrower), I point out the following:

(i) Moribund Pty Ltd does not have Receivers appointed to it as zencorp says. Moribund (as the name suggests) has not traded for approximately 10 years and a Liquidator was appointed at the company’s own instigation to facilitate tidying up its affairs. It is not at all unusual for a company in a group to be wound up when it is no longer used;

(ii) Moribund was never called M C Mortgage Management Pty Ltd as zencorp alleges. He is simply mistaken in this regard notwithstanding his suggestion that care has been taken in tracing Equititrust’s history and “that there is no mistake here”;

(iii) The ill-founded suggestion that “it is obvious that the current directors of Equititrust Ltd devised a plan whereby the company’s name was changed to Moribund and Wayne was to take the fall” is not supported by the facts. Four out of the five current directors of Equititrust were neither directors nor employed by Equititrust when the name was changed to Moribund in October 2009. In fact Wayne was still a director at that time so to use zencorp’s logic, Wayne himself must have voted for the name change to set himself up for a fall. The suggestion is incorrect and untrue;

(iv) There was nothing for Wayne McIvor to take the fall for with respect to Moribund. He left Equititrust voluntarily to pursue other interests, one of which is Insight Equity Ltd. Insight Equity was established by a former Equititrust employee and it is therefore not at all unusual that he invited Wayne to join him after he left Equititrust. Insight Equity has a different model to that of Equititrust and is not a direct competitor of Equititrust as zencorp alleges. I understand that those associated with Insight Equity agree that we are not competitors;

(v) The court transcript comments referred to with respect to me are simply untrue. There was never a suggestion during my examination (and I might add approximately 20 people have been examined to date as part of the MFS administrations) that I can’t even read a document. Furthermore, and more importantly, it is impossible for zencorp to have seen such a transcript as it is sitting on my desk at home as I am still reviewing it for accuracy before I sign it and it is finalised. Perhaps zencorp may enlighten us as to his alleged source in this regard?;

(vi) To answer the question why CBA, NAB and BOSI have retreated out of the EIF and EPIF, one has to look at their individual circumstances. CBA have publicly acknowledged they want to withdraw from the entire mortgage fund industry (as a result of losses they have incurred in this sector) and have in fact wound up their own mortgage fund. NAB have decided they are overweight in the property sector and as such do want a long term relationship in this industry. They have indicated they would be prepared to entertain discreet lending opportunities with Equititrust and its customers. They have also stated that there is no risk of them losing any money with Equititrust. Finally, BOSI are withdrawing from Australia and repatriating capital back to the UK. This is well known by everybody in the financial world. The withdrawal of the banks in a tight credit market is not at all unusual and is not reflective of their attitude to Equititrust as a company. Put simply, their appetite to lend to this industry has changed and we respect that;

(vii) The comments regarding the Priority Class Fund show that zencorp, at best, misunderstands the fund. It is not borrowing more to get out of debt, it is substituting one debt for another which has more attractive terms. It is ,in effect, refinancing existing debt and it is being done for the following reasons:

(a) When the banking facilities were established/utilised, the banks were offering debt at interest rates which significantly lowered our cost of capital. With a tightening credit market and rising interest rates this is no longer the case and as such it was considered appropriate to offer investors the opportunity to stand in the shoes of the bank (ie same interest rate, same security position);

(b) In the unlikely event EIF were to default under the facility, then the PDS requires Equititrust to call a meeting of unit-holders (ie investors) to let them determine if they want a new manager appointed to replace Equititrust – ie it is up to the investors to decide what happens to the fund. It is not possible for Equititrust to simply freeze the fund as zencorp alleges;

(c) The fees referred to by zencorp as “exorbitant” show that he has either not even read the PDS or is being malicious in his comments. The management fee payable to Equititrust if all investors have received there benchmark return (it is described in this way due to ASIC requirements) is .15%. That equates to a maximum fee of $75,000 per annum if the fund is fully subscribed to $50m. There are no expiry fees or other fees as zencorp alleges. I am not sure any objective person would describe these fees as exorbitant.

(viii) Zencorp’s comments about valuations are ill-informed and without basis. If anybody seriously suggests that the property market in Australia has dropped 40% across the board over the past 12-18 months then they simply do not know what they are talking about (particularly when much work has been done by our Landsolve team during this time improving the values of security properties).

(ix) The comments regarding my integrity do not warrant comment other than to say that my integrity was never questioned as part of the MFS collapse (actually quite the contrary). It is simply not possible to defend one’s self against faceless and anonymous allegations (it seems akin to “parliamentary privilege”) but if zencorp would like to post the same comments disclosing his details I would be more than happy to address them in the appropriate manner.

The GFC and its lingering effects were unprecedented. Whilst Equititrust is not happy about freezing redemptions on its funds, the fact remains that this has been necessary to protect all investor’s interests. ING is the 7th largest corporation in the world yet it froze redemptions on several of its mortgage funds. Commonwealth Bank is one of the Top 20 rated banks in the world yet it froze redemptions on its own mortgage fund. We are proud that investor returns have been paid in full and on time throughout the GFC.

Over the past two years, Equititrust has reduced bank debt from $155m to $44m and anticipates having this fully extinguished in the next 6 months. We can then start the process of repaying investors who want there money back.

We are working assiduously to ensure investor’s rights and interests are protected and with a large investment of our own ($40m of which was voluntarily subordinated at the onset of the GFC) underpinning EIF we are showing that we are putting our money where our mouth is.

As always, if any genuine investor has any concerns about their investment they can contact us at Equititrust and we will do our best to address such concerns.

Regards
David Kennedy

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Equititrust said:

Equititrust is unable to reply in detail to the numerous inaccurate rants posted on this website. This is not the forum to be disclosing matters about Equititrust.

Equititrust takes its ongoing disclosure obligations very seriously and if there is a matter which may have a material effect on an investor's investment then appropriate disclosure will be made as soon as practical. The correct forums for this disclosure are in our letters to investors and our regular updates on our website. I would encourage any genuine investor to regularly visit such website or request email alerts when additions are made. As any true investor will also know, an invitation has been extended to receive hard copies of any notifications for those without access to the internet or those that would prefer hard copies. They may also call our investor relations team at any time and if not satisfied may contact our CEO directly.

It is all too easy for anonymous parties to make outlandish allegations on websites that are simply not supported by the facts. If we addressed each such allegation we would be spending all day dealing with such issues rather than the issues that are important such as getting money back to those investors that want it.

Some matters however do warrant specific mention:

(i) The accounts for EIF are not late as some participants on this site repeatedly state. They are currently being audited and will be completed and posted on our website well prior to the ASIC deadline of 16 March 2011;

(ii) The articles appearing in several Fairfax newspapers contain numerous errors of fact and the newspaper knows that they are untrue - their excuse was one of confusion or misunderstanding. A visit to our website will show our response to such articles and what action we intend to commence against Fairfax;

(iii) EIF will not be incurring impairments of $35m (or in fact anything even close to this figure). The true figure for impairments will be posted on our website in the next few days as soon as it is finalised with our auditors. We shall also be posting a detailed assessment of all EIF loans greater than $2.5m (which collectively represent approx 95% of the loan book) outlining current debt, last valuation, date of last valuation, exit strategy and likely timing of repayment;

(iv) When a borrower defaults we work with them to repay the loan. It is only if they are unwilling to assist or dishonest that we take more formal steps. Several dishonest borrowers have made it clear to us that if we continue to pursue them for outstanding monies they will do what they can to cause damage to our reputation. By way of example, one such borrower made it perfectly clear that he has friends in the Sydney Morning Herald and that he would use them to cause damage. The first article about Equititrust appeared several days after we appointed Receivers due to theft by the borrower. We will not shy away from such steps to protect our investors' interests merely because someone threatens us with commercial terrorism;

(v) Olman is not a representative of Equititrust. He is a genuine investor who took up Mr Kennedy's invitation to discuss areas that concerned him (an invitation not taken up by many of those who continue to rant and rave when surely a phone call would have been the most efficient way to address concerns rather than anonymous postings). Equititrust has no influence or control over Olman's posts but applauds his objectivity (ie criticise when it is warranted and compliment when it is likewise).

The irony of the attacks on Equititrust by the SMH (whose investment performance over the past 3 years has been nothing short of woeful) is not lost upon us. $1 invested in Equititrust in 2007 is still worth $1 with investor returns of approx 25c made during this time. $1 invested in Fairfax in 2007 would now be worth 41c (and that's after dividends). That's correct, an investor in Equititrust would be more than three times better off than a Fairfax investor. In the circumstances one cannot help but note the hypocrisy of their attacks.

We are not happy about the deferral in redemptions with some $40m worth of redemptions outstanding (which is more likely $20m-$25m after allowing for those investors who have advised us that they are asking for more so that their pro rata redemption amount in increased). We have however repaid banks approx $100m and paid redemptions of approx $21m since the deferral commenced, all the while maintaining income distributions in full and on time.

We are proud of our history of protecting investor interests (including voluntarily subordinating $40m worth of our own investment in EIF upon the onset of the GFC). In addition Equititrust has voluntarily absorbed all impairments on loans since the onset of the GFC. By way of contrast, the performance of Colonial First State's Mortgage fund (owned by the government guaranteed Commonwealth Bank) does not compare.

Would we like to state that investors investment is 100% safe? Yes we would but ASIC guidelines restrict us from making such statements. What we can say is that Equititrust would have to lose its entire $40m investment before investors lose one single cent. Such commitment to protecting investors is unheard of in the Australian mortgage fund industry.

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kostag said:

Re: Equititrust: they emerge: David Tweed: where are you?

Typical Kolonel Klink Kennedy - this website is not the place to answer factual matters, so we will answer what it suits us to answer now and leave the real facts in the closet. More of the same non-disclosure.

Now, let's look at this last lot of diatribe:-

1. The SMH Journalist cannot be believed, because his own company's share price has fallen. Wow, where did that logic come from? Dare say, Colin Kruger and his editors are independent and objective and not influenced by share price and whimes of their proprietor.

2. The non-paid redemptions are much lower if you exclude those poor individuals who had the temerity to ask for more money back (their money by the way!) than the ASIC hardship guidelines. How do you lower the figure that you clealry cannot repay, by blaming the very investors who ask for their money back, using the peverse logic, that they asked for more than they should be asking for! Glad to see that McIvor doesn't miss out on his $15M a year, snout in the trough!

3. Equititrust $1 investment is still worth $1: is that right? Like to show the poor old investors how this can be the case if 40% of the loan book is in default and likley to climb (in Equititrust's words) up to 80%! If it's worth a $1, why can't we get it back when we want it back. Where is David Tweed when you need him?

4. We'd love to tell you 'we are safe' but the Corporations Law and the Corprate Watchdog (ASIC) won't let us tell you that. And why would that be? Because they are there to protect investors by chance?

I am sorry - my patience with this self serving cowboy outfit is at an end. I intend to move for the ASIC to appoint an independent Receiver. Alternatively, the National Bank ought very carefully consider their conduct.

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No Trust said:

Kostag, the person who started this thread was dead right... It was a Cowboy Outfit indeed...

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Wet a line said:

Just read Mr. Whyte,s Linkedin's profile, guess where he worked before he immigrated to Australia, connect the dots.

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No Trust said:

25 Years in a major UK bank is interesting experience...

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