This article is from the Australian Property Journal archive
UNITHOLDERS in the Pacific First Mortgage Fund have rejected Balmain Trilogy’s proposal.
The two resolutions proposed by BT to change the fund’s constitution got the support of 67% of all units voted and 82% of all unitholders who voted, which fell short of the 75% approval requirement.
Joint CEOs Rodger Bacon and Andrew Griffin said clearly there was strong support for the new strategy, but it was hijacked by a small number of unitholders and others who waged a campaign of misinformation.
The resolutions were:
· Resolution 1 would have allowed changes to the Fund’s constitution to enable a new strategy to be implemented, including significant choices about participation in the redemptions program.
· Resolution 2 which only occurred if Resolution 1 was passed, would have allowed Unitholders to decide whether they prefer the current unit price or the issue price as the basis for redemptions.
· Resolution 3 was for a reduction in the manager’s fee from 1.5% of the gross assets to 1.25% of the net assets of the fund. This resolution was soundly defeated with 64% against.
Despite the results, Griffin said the payment of $35 million in October promised to unitholders would be made and the remainder of the payments program — a total of $295 million by October 2012 – would also proceed as promised.
Griffin said there were four consequences as a result of the vote.
“Hardship payments cannot be made under fund’s present constitution because a current unit price cannot be struck. And the management fee will remain at 1.5% and the opportunity to cut it to 1% and introduce a performance fee that was aligned to how the fund performed would not proceed.
“Unitholders will be denied the option to leave the fund early and will have to wait till payments are made. Unitholders who wanted to stay in the fund will be forced to take payments,” he added.
Meanwhile Griffin said the Morgan Stanley offer of 26 cents a unit required the successful passing of Resolution 1. It is now up to Morgan Stanley whether they wish to waive this condition.
“Clearly we will need to find some alternative options for any asset development to be carried out. What has to be understood is that PFMF is no longer a mortgage fund but a property development fund, and the cost of managing that development could exceed the current management fee,” he continued.
Bacon said despite BT failing to achieve the 75% threshold needed, there were no regrets in calling the meeting.
Australian Property Journal
