Level 5 10 Customhouse Quay PO Box 3222 DX SP20011 Wellington New Zealand, PHONE 04-495-0999 FAX 04 - 496-2952
16 September 2013
Canterbury Mortgage Trust – Change of Manager
As you will be aware, Trustees Executors Limited (“TEL” or the “Trustee”) is the trustee for the Canterbury Mortgage Trust Group Investment Fund (“CMT” or the “Fund”), which commenced wind up in February 2009. Until now, the fund has been managed by Fund Managers Canterbury Ltd (the “former Manager”). We are writing to advise that the new manager of the fund is Canterbury Fund Managers Limited, a subsidiary of accounting firm BDO Christchurch.
Since wind up of the Fund the Trustee has been exploring all avenues to maximize the recoveries for investors. TEL commissioned BDO Christchurch to report to it on the former Manager's compliance with its obligations in respect of the Fund. BDO's report has signalled that there are areas of non‑compliance. The former Manager denies the conclusions in the BDO report. The Trustee has formed the view that it has a claim against the former Manager. The former Manager denies this. Discussions will continue between TEL and the former Manager, and their respective legal advisers. As we are in a legal dispute, we are unable to make any further comment on this matter at this stage, except to advise that we consider we are acting in the investors’ best interests.
The Trustee commenced proceedings in the Court relating to the costs involved should it need to apply to remove the former Manager. The Trustee was concerned about the potential conflict if the former Manager continued to act.
The former Manager has now resigned as Manager so as to avoid the significant costs that would be incurred by the Fund if there was a further Court application to remove it. Under the terms of the Trust Deed a replacement manager is required and TEL has appointed Canterbury Fund Managers Limited, a subsidiary of accounting firm BDO Christchurch in this role.
The Trustee and the former Manager are very conscious to ensure the smooth ongoing administration of the Fund and to that end investors will notice very little change, as the replacement manager will be able to access and utilise the Fund’s records, telephone numbers and website.
In the meantime the Trustee will continue to work with the Fund's credit consultant in realising the remainder of the Fund’s loan book.
To summarise the Fund’s current position, to date investors have received capital repayments of 83 cents in the dollar. The Fund currently has loan assets of $32.5 million less provisions of $24.1 million against those loans, giving net loan assets of $8.4 million, together with $5 million cash.
Further loan recoveries are required before the Fund will be in a position to make further capital distributions. We expect to be able to make a further capital repayment to investors of approximately 5 to 8 cents in the dollar on the basis of those recoveries. We are also in continuing discussions with the former Manager. At this stage, due to the legal process, we are unable to advise anything further in relation to the basis of actions to be taken against the former Manager.
Should investors have further questions please write to the Trustee at the address above and we will endeavour to encapsulate responses to these questions in our next correspondence to all investors.
We will update investors again as appropriate.
Southern Regional Manager
Trustees Executors Limited