A Report short an Independent Expert

Hi All

Having looked through the Leadenhall Report there are a number of issues, not the least of them a breach of AFSL conditions and the level of genuine opinion is questionable.  This breaches ASIC guidelines RG111 and RG112, which in turn breach Leadenhall's AFSL conditions along with the Corporations Act.

Before going into the detail researched (outlined below), I am keen to understand what others believe are breaches of Leadenhall's fiduciary duty and whether there are other opinions on additional conflicts/breaches of the Corporations Act and Regulatory Guidelines.

Following is an email template we need to convince shareholders to raise this serious issue with Leadenhall to provide a truly Independent Export Report with governance by ASIC.  If not ASIC, then the Financial Ombudsman Service.  Please pass on to all shareholders you know of in PAC to ensure we get the message across.

Also, does anyone else have another email address that this should be sent through to.

Best of Luck
Lost


Following is an email template for PAC shareholders to raise an issue to Leadenhall, copying in the Financial Ombudsman Service and the email address of the ASIC team that investigate breaches of AFSL.

<> SHAREHOLDER COMPLAINT REGARDING LEADENHALL EXPERTS REPORT - PACIFIC CURRENT GROUP LIMITED (PAC)
To: [email protected]
Cc: [email protected] ; [email protected]

SHAREHOLDER COMPLAINT REGARDING LEADENHALL EXPERTS REPORT - PACIFIC CURRENT GROUP LIMITED (PAC)

For the Attention of: Leadenhall Directors Dave Pearson and Richard Norris - Independent Experts - Pacific Current Group Limited (PAC) Restructure - Simplification

I am a Pacific Current Group Limited shareholder.

Leadenhall has provided my company PAC with an independent expert's report in relation to an extraordinary general meeting of members, to be held on the 13^th of March, which will propose that shareholders agree a (further) restructuring of their company and take on questionable debt from parties who have contributed to an actual loss of the company’s value.

I have read the Leadenhall report. We can make no sense of it and equally, neither can our advisers. In fact, we have been advised, Leadenhall's report is not independent at all, having regard to Australian Securities & Investment Commission (ASIC) Regulatory Guides 111 and 112. Furthermore, I believe the shareholders have been misled and deceived about a whole range of matters concerning their equitable interests in the company which breaches your duty to provide independent advice to shareholders.

The breach of RG111 compliance is based on information you have reproduced on pages 34 of the Report outlining the percentage ownership of the funds by the Aurora Trust versus what was reported in the Aurora Trust Annual Report to the ASX on the 3^rd of October 2016 and what is reported to the Securities and Exchange Commission (SEC) in the US. There are further discrepancies in the Asset Under Management (AUM) between your report on page 34 and the Aurora Trust Annual Report. The funds that have a varying percentage of ownership between your report, the Aurora Trust Annual Report and the SEC are:

• Seizert Capital (50% in Annual Report versus your report of 100% and SEC’s 42.86%)
• Alpha Shares (31.03% in Annual Report versus your report of 76% and SEC’s 20.83%)
• Aether Investments (100% in Annual Report and your report versus SEC’s 83.33%)
• GQG Partners (Your report has 5% versus the SEC’s 7.69%)
• Freehold Investment Management (Your report has 27.5% versus the Annual Report of 30.89%)

The discrepancy in AUM are:

• Alphashares there is a discrepancy of over $130 Million, if the 76% ownership level is correct. If the SEC is correct, AUM is overstated by about $30 Million.

Don’t believe you have considered the true value of the company diligently and does not provide any confidence that your report can reach an accurate conclusion of what ‘fair and reasonable’ is. The discrepancies identified above are material enough that it appears you are inaccurately valuing the acquisition and will lead to potential loss for non-related party shareholders (those that you were requested to provide the report for by the board).

The % ownership discrepancy means that there is a variability of over $2Billion in AUM which is a significant variation.

Regarding the reduction of the XRPU preference shares from $US42 Million to $US21 Million, it is not clear whether the Raven Capital Management LLC sale proceeds are being provided back to the Northern Lights parties or is being contributed back into the Aurora Trust. From the details you have provided in the Report it is not 100% clear. This buries the value of the true transaction in the detail of the Report, while making it look like it is a reduction of $US21Million, it is in fact only a $US11Million reduction.

In addition to the above, there is no advice regarding the loss of AUM with TAMRO and WHV disappearing from the joint venture agreement and Aurora Trust. This again is material at $A14Billion plus loss from the original agreed purchase. Is it in Leadenhall’s ‘fair and reasonable’ opinion that this justifies a net $11Million reduction in debt repayment? The Report in no way indicates whether the reduction is in the non-related shareholders interest against the original terms of the Joint Venture agreement (Scheme of arrangement or merger, whatever you want to call it legally). Due to this not being in the report, it is believed that there is undue influence in producing the report and breaches RG112, which aims to ensure Independent Expert Reports provide an independent and genuine opinion.

As a very concerned shareholder, unless rectified and reviewed immediately, I will be lodging a complaint with ASIC and the Australian Securities Exchange (ASX) to determine whether in fact the expert's report is not a significant breach of your Australian Financial Services License (AFSL) conditions, in particular the potential loss to clients from your current advice in the report.


<>