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Equititrust?

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Not making a public statement in 2 years is not "fluffing it".... Its Stuffing it up... Its also highly irresponsible and not good management.

Making the excuse, "oh I think they were a bit busy with Administration" to make a public statement is absolute nonsense.

The GFC is not over nor is the principle of prudent and responsible lending. The issue I am alluding to is that the sector as a whole has a lot answer for in terms of risky lending. Not all of the problems can be attributed to the GFC.

The investor you have spoken to would not have been yourself would it ?

Having never spoken to or met Kostag, the same accusation could be levelled at you in the reader comments section of the Gold Coast Bulletin Article. Are you the poster named "Another Equititrust Investor” or Equititrust or one in the same.

In terms of interest, providing the rules of this forum are adhered to, it could be any number of things related to the current saga none of which have to be dutifully revealed to any other party posting on this thread..


Other Investors spoken to do not have the same level of “unwavering confidence” in regard to the issues outlined less than a month ago by Colin Kruger of the Sydney Morning Herald.

They are valid concerns


"It also said EIF had a sufficient level of cash to ''meet its operational cash needs, including income distribution payments to investors for the next three months''.


“Equititrust has met all distribution payments to the fund's investors to date but it may face challenges in the future. There was $77 million worth of EIF loans in default in November, representing 29 per cent of funds under management.”


http://www.smh.com.au/business/equit...109-19jur.html

For ease of reference these are the other questions being asked by other investors..

Which month are we in now Month 2 or 3 ??

Why was this left to the last minute ?? 3 months of "sufficient cash"??

Is there a plan B apart from the 50M fundraising ?

What happens after 3 months?

If the situation with the banks was getting so dire, why was this initiative not instigated earlier to protect the interests of all stakeholders, most important being the investors..?
 
I think that both NO TRUST and OLMAN have interests other than what has been declared. Certainly, OLMAN plays the "good cop bad cop" line to perfection.

That aside, what has been good about the dialogue, is that 'issues are getting raised' and whilst probably not getting answers etc - there is soem action at some level.

But simply:-

1. Equititrust like it or not has $200m plus of public money

2. to claim to be 'too busy with administration' as an excuse not to provide proper timley financial data on the web site atleast, simply is pretty poor stuff. Worse, if Equititrust does not have accurate timely financial information at hand, perhaps that explains why they now seem to have a severe cash crisis. This 'less than 3 months of cash available' is teh first that I have heard (thanks NO TRUST for this reporting) of such a serious issue. If some 2 years after the GFC and over $60M of redemptions not being repaid, we now have a 3 months cash crisis - how serious is the mess?

3. It is not good enough to say that on the one hand Equititrust is too busy with administration to report however on the other hand, investors (how many hundreds of us are there) should simply pick up the phone and have a chat with the ever-friendly and transparent management. Frankly, I don't know half of what I am meant to ask. However, what I would like is that if proper reporting in the format that the law requires is posted that the relevant powers such as ASIC - the corporate watch dog - would vet it and then if something was wrong, then step in. If all is OK, then good stuff - we can all switch off. However with Equititrust frantically trying to raise $50m that will rank as better secured to our money; less than 3 months opertaing cash in hand; banks breathing down there necks; and a loan book that at best would seem to be heavily in default and weighted toward larger imprudent develeopment style loans in suspect areas etc - ofcourse, I am worried - and so should we all.

4. Media and Mr McIvor: I understand that he is a reclusive chap and has for many years singlehandedly driven a tough business, very well. I guess I can therefore accept that he has a policy of not currying favour with the media. That personal choice is OK when all is in order however when it all changes, suddenly you do have to answer to teh $200million plus of public whose money you are playing with. I am sorry, David Kennedy does not impress. He answers what he wants , when he wants. Anyone who answers direct questions with words such as "I understand" is simply mincing words. I don't wnat his understanding, I wnat plain simple certified facts and if he is not prepared to provide that, then Mr McIvor should put someone in control who both has the information and is prepared to standbehind it.

5. The subordinated investment etc that Equititrust claims to have in one of its funds of $40million etc totally confuses me. Perhaps unfairly, Choice Magazine saw it worthy of an 'accolade' as some shonky award. All that aside, it is presented to me as being some cash investment made by an exterior party (even if related) into the fund. However, isn't it in reality some 'round robin' transaction where past accumulated profits and resreves are treated as some form of investment, one fund in the other, and frankly, it is perhaps only as good as the inflated valuations and earning, now to be written back, as then may have been applicable. I have been involved with two other investments, both whom had in effect these 'revaluation reserves' adding to so-called Equity etc. Financial planners interpreted this all to be that the company had so much equity swinging before I could ever to be at risk. Well, post GFC, the suspect valuations collapsed and the paper 'revaluation reserve' dissappared, and others and myself were dead in the water. Definitively, did Mr McIvor or interests associated with him actually invest some cash reserve of $40m into the company and agree to subordinate it behind our money? Frankly, I for one don't expect anyone to do that, but I do resent being told to take comfort because of it, if it is simply some accounting trick or contrivance.
6. My final concern and along much the same note, is that logically if $40m of investment is sub-ordinated behind all of us investors, why should the sub-ordinated investment receive - a) such a large return and, b) actually get the return paid , when so many of us can't get our money out. By the time the sub-ordinated inverstment gets called on, at the high rate of return it is getting, they will have in effect been fully repaid. I would swap my $1.2M for sub-ordinated investment too if I could get paid the same rate of return.

Anyhow, I suspect that none of us will get answers and we will have to keep watching the newspapers for what is happening. I hope that I find future news in the re-BIRTH section not the DEATHS.
 
Total Loans in Default

The information below is an extract posted on the Equititrust website today:


Equititrust Income Fund
Supplementary Product
Disclosure Statement

3rd February 2011


Equititrust deems any loans for which interest payments are greater than 90 days in arrears to be in default.


As at 31 December 2010, there were fifteen (15) loans that were 90 days or more in arrears. Loan principal for these loans totalled $98,973,029, being 37.4% of total loans by value.


Given the current economic climate it is possible, depending on loan repayments received and the progress of recovery action undertaken by Equititrust, that the value of loans in default will increase to approximately 50% of total loans by 31 March 2011, and to approximately 80% between 30 April 2011 and 31 December 2011.

It seems that since the Publication of Colin Kruger’s Article in the Sydney Morning Herald on 10 January 2011 the loan default position has deteriorated dramatically in one month.

Quote Colin Kruger Sydney Morning herald

"There was $77 million worth of EIF loans in default in November, representing 29 per cent of funds under management.http://www.smh.com.au/business/equit...109-19jur.html"
 
Re: Equititrust: 50% of loans in default in less than 55days!

NOTRUST: this is a very alarming revelation and it seems that whilst constantly castigated, people such as Mr Kruger and others in the media are spot on. What alarms me the most is that Equititrust has crowed about their Landsolve strategy as being the way to calmly resolve bad loans and in fact, despite huge cost and overheads; much time spent; and new moneys raisings etc - we see a prediction of 50% of the whole loan book as being in serious distress (still) with less than 55days!
Now, what must alarm all investors even more is that Equititrust 1 is otu trying to raise $50M at a high rate and in priority to our capital , and intends to lend that moeny to Equititrust 2. Equititrust 1 will continue to get high fees and interest on its (so-called) sub-ordinated fund.
If the good loans are by 31-3-11 down to 50% or less than say $130Million, we are starting to look very very shaky. In fact, take off the new high interest loan of $50Million, we investors have less than $80million to share between us. I don't even want to go for the calculator to work out how many cents in the dollar that equates to. THis is using Equititrust's own rubbery figures!
This is final confirmation of what we have all been fearing!
 
Let’s look at it in Summary:


Investors Funds Frozen for over 2 years

Lack of public statements to investors for over 2 years

3 Months of remaining Cash to fund operations and Investor Returns

Eye watering Internal Company Forecast that 80% of loans may be in default by April 30 i.e. 51% increase in loan defaults in 5 months

Hasty announcement that a further 50M will raised from the public ???

Parallels - Similarities to anything else in recent history????


The doomed capital raising by MFS also shone a spot light on why 300m was "really needed" The article below and prophetic comment by analyst Charlie Green is an interesting read for those interested in recent history of the mortgage fund sector which originated from Gold Coast Law Firms..

Michael King opens up about MFS
Nick Nichols, business editor | January 17th, 2010


Market analyst Charlie Green, formerly a long-time supporter of MFS, is probably the man who crystallised the collapse of MFS.

He's the one who called it 'all over' during the teleconference.

"I don't think you'll make Valentine's Day, Michael," Mr Green told Mr King at the time, and he was right.


http://www.goldcoast.com.au/article/2010/01/17/179445_gold-coast-business.html


It would be interesting to get Charlie Greens take on the Equititrust saga especially after yesterday’s revelations..

The answer may be "EQUITISOLVE"
 
Re: Equititrust: analysis by Charlie Green

I dont know Mr Green. Does he still operate on the Gold Coast? If so, does he have any financial analysis or comment on Equititrust?

 
Charlie Green I believe is an analyst of Public Companies traded on the Australian Stock Exchange; I think he is based in Brisbane.

The comment was referring to what a "respected analyst would conclude from the summary of facts to date"
 
Re: Equititrust: an update to a 2009 PDS

I am not a financial analyst, however there are a few things in the long overdue PDS worthy of comment:-

Capital Warranty Investment
As detailed in the PDS, Equititrust Limited has invested a substantial proportion of its retained earnings in the Fund.

Now, as I speculated yesterday - Equititrust has not invested in the true sense of the word $40million into anything. In fact, with the payment of management and interst fees of circa $15million, it is a net 'taker' out of the business, at a time when it is cash strapped. The 'investment' which the respected consumer magazine CHOICE saw fit to award the 2009 SHONKY award to, is in fact some profits, not with drawn. This is a whole lot different from having cold hard cash on the block.

As at 31 December 2010, there were fifteen (15) loans that were 90 days or more in arrears. Loan principal for these loans totalled $98,973,029, being 37.4% of total loans by value.

The 'dud' loans now consume 37% of the total.

As at 31 December 2010, 16.7% of investors’ funds under
management were in the pending withdrawal category.

As at 31-12-10 I am going to guess that this equates to approximately $37,400,000! I have to guess because (convienently) nowhere can I find a current summary of the loan book or the investor and bank exposure. Where is Charlie Green when you need him!

Resignations
Wayne McIvor resigned as a Director of Equititrust on 14 May 2010.
John Haney resigned as a Director of Equititrust on 3 September 2010.

Why did these long standing respected Directors jump ship!

Equititrust is also seeking to raise up to $50 million via
the newly established Equititrust Priority Class Income
Fund (ARSN 089 079 729) to refinance the existing facility
with NAB, for future lending with board approval, and for
payment of distributions and redemptions to investors.

The National Bank and Bank of Scotland are rumoured to be owed approximately $45million. Un-repaid invetsors are owed (my guess) about $37Million. So that adds to $82Million. The loan book , asusmign that it is about $235,000,000, will be half in default by 31-3-11 (that is the PDS estimate), so we have about $117,000,000 of loans less: the Banks of $45million; less default investors who have not been paid back to date of $37,000,000 , that leaves about $35,000,000 to repay the balance of the investors. Now, I am running blind because the PDS is devoid of real detail, however that is how it looks to me, right now.
 
Product Disclosure Statements Not Available On Company Web Site

As of yesterday morning the company Web Site has removed its Product Disclosure Statements:

Product Disclosure Statements

Equititrust Income Fund - Not currently available

Equititrust Priority Class Income Fund - Coming soon

What precipitated this ?


Interim Financials normally posted in December are still not published..
 
Re: Equititrust. PDS Statements removed

Perhaps OLMAN can call Equititrust's David Kennedy and find out what is happening
 
Public Statement - Loan Book - Equititrust

All investors deserve a "Public Statement" about the implosion of the Loan Book. If this is not a material event, then what is...

In terms of raising another 50M from the Australian Public this information should now be placed at the very front of the PDS (as a supplementary disclosure of change in material circumstances) seeking to raise these funds.

Given the company's acknowledged change in material circumstances yesterday, it would seem prudent from a legal perspective to also have the auditors revisit their assessment of Equititrust as a going concern.

From past performance it seems that this will only be done if ASIC regulations demand it. An updated statement by KPMG that the company is in a position to continue as a going concern would go a long way in reassuring investors given the current and projected status of loan book.

The last statement by KPMG was over 6 months ago and as we can see from the loan book a lot can change in a month let alone 6 months.
 
Frozen funds still raising money, say auditors

Frozen funds still raising money, say auditors

Anthony Klan From:

The Australian March 02, 2010


"The auditors of Equititrust, which holds about $270m of investor funds, raised concerns about the group's stability in late 2008 and again in October last year."

"A material uncertainty exists which casts significant doubt about the scheme's ability to continue as a going concern," KPMG warned in the group's 2009 full-year accounts."

"Despite the continuing freeze and the stability concerns raised by KPMG, Equititrust has continued raising funds under a prospectus issued in February last year. Equititrust managing director Mark McIvor did not return calls yesterday but has previously said the fund is in a healthy position and offers a "capital warranty investment" whereby the management would incur the first $40m of any potential losses."

http://www.theaustralian.com.au/bus...ney-say-auditors/story-e6frg8zx-1225835823806

The above article is less than a year old and what a difference a year makes.

The comments from KPMG regarding "Material Uncertainty" and Significant Doubt" were made when the default level was a fraction of what is today and what it is estimated to be by April.

As to the fund being in a healthy position.. It would be a brave man who would make that statement today...
 
Re: Equititrust: an update to a 2009 PDS


In the above calculation it seems to assume that if the loan is in default then it has no value. However even if the loan is in default that doesnt mean that the underlying mortgage security over real estate is worthless.

Now the value of the underlying securities has most likely been reduced somewhat in the present market but the mortgages still have real value nonetheless and I think they should be included in the above calculations. I dont know anything about the other figures in the above calculations.

As an investor in ET I find the impending loan default rate really worrying however there are still real estate assets to be realised and a few quick mortgagee sales would make me feel a whole lot more comfortable.
 
Re: Equititrust: an update to a 2009 PDS


You're right, klua. But don't expect any reasonable discussion with the hyenas circling the kill here. Default loans are taken over by Equititrust at an early stage to salvage what they can. One can imagine the monumental task they're facing. With the lousy condition of the property market, values have been eroded significantly, but there is still value to be realised. It will be a long and painful haul to the end, no doubt, but beware of placing too much credence in the rubbery logic and unfounded allegations posted here. These guys are not investors and have an axe to grind. I can recommend direct communication with Equititrust to discuss any concerns. You may not gain much comfort from the realities, but at least it will be relevant.

cheers!
 
Equititrust Loan Default Disaster

Olman's previous post above states

"Too late? I don't think so. I personally feel the unfamiliar stirrings of an uncharacteristic (for me) optimism about the future with Equititrust." This was only last week.

This confidence seems to have evaporated in the light of the disclosure of implosion of the loan assets.

The only information offered yesterday was the company's own nightmare assessments of the loan book. Up to 80% of the loan book in default by April is in anyone’s terms a failure of monumental proportions..

In terms of quick assets sales, this won’t happen. Landsolve from all appearances is now acting in the guise of a quasi-receiver over the default assets.
Another inherent Conflict of Interest?? Equitisolve if it is solving anything should be able to give the investors a truthful assessment of the value of the default assets and realisable returns. The issue is, does anyone want to face the truth at the moment ??

The assets are still worth something, the question is how much.

If a receiver was appointed to immediately sell the assets, a valuation would immediately be done and realisations would occur. At the moment no one knows what the black hole will be. Impairments to loans to date have been substantial.

Blaming the lousy property market is one thing, however a full and proper investigation of the lending practices undertaken which have led to a loan book approaching 100% default status is now warranted.

In light of the loan book revelations, surely the 50M Capital raising has to be in serious doubt..
 
No Trust:

"The assets are still worth something, the question is how much.

If a receiver was appointed to immediately sell the assets, a valuation would immediately be done and realisations would occur."

Spoken like a true speculator - not hoping for a fire sale, by any chance?

Why don't you declare your interest?
 
Re: Equititrust: an update to a 2009 PDS

sorry KLUA - you are ofcourse 100% right. Let's assume that 50% of the book is in distress and I guess lets assume that those loans take write off of 50% - taht would mean in reality a 75% recovery rate of the gross assets, and I suspect that this is close to the mark. On that basis, INVESTORS maybe considering an 80cents in the $ return, which is a lot better than some of us have speculated.

Sadly, (and again not Equititrust's fault) the Qlsd market is almost terminal in terms of investment property with now the floods etc - so I doubt if there is a retail market that would be supported by the Australian banking system.

There are also disquieting rumoours now in the marketplace about a fund called LM Mortgages Management - another Gold Coast outfit - they have even more loans than Equitrust, and if they fail as well, the sheer weight of distressed properties hitting the market, is going to make it even worse.

 
The qualification that the "assets are worth something" is juxtaposed as to the postion that they are worth nothing..


Apart from confidence evaporating is seems that paranoia has set in as well..

In terms of the loan assets that Equititrust is currently burdened with, well that’s another issue all together. Whether there is a fire sale or not, investors now have to be given a voice in terms of voting on who continues to manage their investment.

If the loan book will hit an 80% default rate and the money will have been frozen for over 2 and a half years, isn’t it time that the investors were given another choice ?

In a democratic process let the majority decide based on the performance to date..

As mentioned in a previous post, my interest may be varied as it is concerns the current saga that is unfolding, and as far as the rules of the forum are concerned, this interest or otherwise does not have to be dutifully disclosed to any other party posting on this forum.
 
Re: Equititrust: loyalty - I guess we should show some

Olman: I think that you are correct on one issue, and that is there is a mob sentiment developing and that can't be good for anyone. However, rather being foistered on David Kennedy (who had a chequered association running fialed Gold COast financier MFS which is not noted in his Equititrust CV) old time investors need to hear some no nonsense truth from Mr McIvor. He is not at fault here. The markets, floods, GFC, bank withdrawals - you name it! That is all accepted however its is as NOTRUST correctly points out with cash predicted to run out by 31-3-11; loan defaults skyrocketing to 80% !; and investors repayments frozen for 2years plus - investors now need and demand some action. Again, this is not the blame game. It is reality. What does a call to David Kennedy do right now? All is OK? We are working on it? Landsolve (a looseky and recently cobbled crew of failed property developers and financiers) is going to fix all. It is simply an expanded version of highly paid Equititrust. If loans are in default (and we are now at stage where the majority of them are) why should we investors keep getting deferred whilst what little cash there is is paying big salaries and massive returns and fees on the "sub-ordinated loan" (which is not a loan at all, as we finally found out) and the whole time, despite beign assured it is being stabilised and corrected/managed, it is in fact getting a whole lot worse and predicted (by Equititrust itself) to get a whole lot worse in the next 3 months - potential bad debt level of 80% and complete cash run out. In my view, Mr McIvor really has to stand up and say that he has done his best and we would all agree with that and do thr proper thing; cut the overheads and call in the experts. and
 

We know that anyone can post; this is not in question.

The actual question is, why do you not disclose your interest?
 
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