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- Release Date: 05/07/12 14:17
- Summary: GENERAL: PGC: FMA action to recover $25 million in related party loans
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PGC
05/07/2012 12:17
GENERAL
REL: 1217 HRS Pyne Gould Corporation Limited
GENERAL: PGC: FMA action to recover $25 million in related party loans
FMA can now confirm its continued engagement with Perpetual Trust Limited
(Perpetual) to recover $25 million in related party loans made by Perpetual
as trustee of the Perpetual Cash Management Fund (Fund).
Perpetual is a subsidiary of Pyne Gould Corporation (PGC).
In a High Court judgment delivered on 26 June 2012, Justice Heath discharged
confidentiality orders originally made at the request of Perpetual in
proceedings taken against FMA. Perpetual has sought judicial review of FMA
decisions and actions since it became aware of issues in relation to the Fund
in April this year.
The Court of Appeal yesterday dismissed Perpetual's appeal against the High
Court decision and ruled it can be released.
"FMA welcomes the High Court and Court of Appeal decisions and believes they
emphasise the importance of transparency in the markets," said FMA Chief
Executive Sean Hughes.
FMA previously confirmed on 1 May that it was making inquiries into issues
regarding PGC and related entities. Those inquiries have to date focussed
particularly on loans made by the Fund to Torchlight Fund No. 1 LP
(Torchlight) and the implications for the investors in the Fund and the
Perpetual Mortgage Fund.
In FMA's view, these loans were not in the best interests of investors in the
Funds and the circumstances in which they were made by Perpetual reflects a
lack of judgment and lack of understanding of its role as trustee of funds of
this nature.
FMA has sought to minimise losses that investors may suffer by engaging with
Perpetual to seek the return of the loans. Since April 2012, around half of
the total amount lent to Torchlight has been repaid, but approximately $13
million remains outstanding. FMA considers Perpetual has now had ample time
to secure repayment of the loans, but is concerned at the lack of progress
and the consequent risk to investors.
FMA believes investors in the Fund need to be aware of its concerns about the
loans made by the Fund to Torchlight and the delays in repayment, so they can
make informed decisions about their investments.
"FMA has moved proactively in the interests of investors in the funds and is
pleased the High Court's decision can now be released. Actions taken by FMA
are in line with its objective to promote the confident and informed
participation of businesses, investors and consumers in the financial
markets," said FMA Chief Executive Sean Hughes.
Both the High Court judgment and the Court of Appeal judgment can be found on
FMA's website.
Any investor in the Perpetual Cash Management Fund or the Perpetual Mortgage
Fund who is unsure whether to retain their investment in the funds or to
request that it should be repaid should take advice from their Authorised
Financial Adviser. You can find information about how to find and use a
financial adviser on FMA's website.
Background
Torchlight is a limited partnership for sophisticated investors run by
Torchlight GP No 1 Limited (Torchlight GP), a subsidiary of PGC. FMA
understand George Kerr is Chairman and has an ownership interest in
Torchlight. Brian Mogridge (one of Perpetual's two directors) and Torchlight
GP also have ownership interests in Torchlight. Mr Kerr is also a director
and owns approximately 76.5%, of PGC.
Ends
Contact:
Tony Reid on 021 739 052 or [email protected]
End CA:00224672 For:PGC Type:GENERAL Time:2012-07-05 12:17:04
