Trilogy takeover attempt piracy: LM
Wednesday, 10 October 2012 10:25am

An attempt by Trilogy Funds Management (Trilogy) to replace LM Investment Management Ltd (LM) as Manager of two LM feeder funds is opportunistic, hostile and without any consideration of investors' interests.

This was the underlying sentiment within a counter response released by LM to a statement released by Trilogy asking unitholders to vote to replace LM as the Responsible Entity for the LM Wholesale First Mortgage Income Fund, and the LM Currency Protected Australian Income Fund, feeder funds of the LM First Mortgage Income Fund (FMIF).

Describing it as extraordinary, LM claims that Trilogy's action is based on inaccurate and misleading information, and it is not in the best interests of fund investors.

LM understands that the takeover bid was commenced by three (3) investors indirectly holding less than 10% of interests - not the 48% quoted by Trilogy - in the LM First Mortgage Income Fund, via its feeder funds.

The LM Wholesale First Mortgage Income Fund holds 20% investment in the FMIF, and the LM Currency Protected Australian Income Fund holds 24% investment in the FMIF.

Based on the communications that LM CEO, Peter Drake and his senior executives have had with clients (concerning investment in the fund), most support LM's continuing management of the funds.

"The information Trilogy is utilising to gain support is superficial at best. Trilogy has no knowledge of the assets of the fund," said Drake.

"It is important that investors understand the position of the fund and its assets entirely and comprehensively, before making any decision with respect to any offer or vote that Trilogy or any entity presents."

Given the strength of LM's in-house team of property experts, Drake questions the relevant property expertise of Trilogy, and their understanding of the intensive development management that needs to be applied to the assets.

"Further, our management fees for the First Mortgage Income Fund have been historically low, averaging 1.41%. These assets need to be worked through, not simply sold down, and certainly not to be offset by a rapidly diminishing unit price as proven by previous Trilogy takeovers," said Drake.

Far from offering any magic solution to investors in the funds, Drake compares the promises being made by Trilogy to those made to investors of City Pacific. The result of those promises saw the unit price slashed from 61 cents in December 2008 to 13 cents in June 2012.

"Investors in the LM funds would not want to see Trilogy achieve the same disastrous result for them", Drake concluded.

Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

The age of SMSFs
The growth of the number and volume of self-managed super funds (SMSFs) seems to have no end. As the sector reaches the one million more
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

BRUMBIE: Walk quietly but carry a big stick
It's now a few weeks since Financial System Inquiry (FSI) chief David Murray handed down his interim report and already sectional advance ... read more
News Search   
VideoBrought to you by
MAX 2014 Highlights
The annual MAX forum places all the movers and shakers in financial services when it comes to sales, marketing and distribution. Find out the recipe of those who are taking the lead. Watch the video n ... Watch video
Claims Management
Is the industry doing enough to engage employers in relation to their role in the claims process? Comments by: Annette Torrington -CommInsure, Pauline Vamos - Association of Superannuation Funds Australia ... Watch video
Platinum Asset Management
Reflecting on more than three decades in the industry, Platinum Asset Management managing director Kerr Neilson says one of the changes in the industry has the been the erosion of the information advantage ... Watch video
Member Awareness
Lawyer involvement in the claim assessment stage can lead to the member being financially worse off and increases claims administration costs. What can be done to reduce lawyer involvement in the claim ... Watch video
Who wants to be a RockStar 2014 Highlights
Count's Chris Mekhail was crowned 2014 Rockstar this year for his soaring rendition of Swedish House Mafia hit 'Don't You Worry Child' at the annual Who wants to be a RockStar event organised by the Finance ... Watch video
AMP Capital Australian Equity Concentrated Fund
We invite you to watch our latest video program on FSiTV featuring AMP Capital's Co-Head of Australian Fundamental Equities Gian Pandit, as interviewed by Mark Smith, deputy editor of Financial Standard. In ... Watch video
Get it
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Best Practice Forum: Managed Accounts
Risk and Liquidity Forum
Liability Driven Investing Forum
Major Market Players Symposium
Investment Performance Measurement, Attribution & Risk Management

$245 (inc GST) for 1 year
Copyright © 1992-2014 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something mnwgqnRp