Regulator's Eye on Prime Case

 
We invite unitholders to read the attached article by Mr Nick Lenaghan in today's Australian Financial Review.
 
As reported in the article, the Liquidator, in partnership with Mr William Lewski, is planning a legal action against Lend Lease Primelife (LLP) over the alleged mismanagement of the Trust's retirement villages. We understand that interests associated with Mr Lewski intend to fund the action against LLP in return for a success fee.
 
As unitholders will recall, Mr Lewski has been named as a defendant to the listing fee claim which was filed in the Supreme Court of Victoria on 5 March 2012 seeking the recovery of approximately $50m. We fail to understand how the Liquidator can, on the one hand, commence civil action against Mr Lewski (as per the listing fee claim) and then, on the other hand, engage Mr Lewski as a partner in pursuing an action against another party.
 
We remain strongly opposed to any partnership between the Liquidator and Mr Lewski to pursue an action against LLP. We believe a course of action exists against LLP and have made strong representations as to how we believe this should be pursued. We maintain that LLP does not have proper title to the management rights and that these rights must be immediatiately returned to the Trust. The course of action that we have proposed against LLP does not involve any funds being provided to interests associated with Mr Lewski.

As reported in the article, the Liquidator is also planning action against Lend Lease and entities associated with Mr Lewski over the sale of the management rights. We maintain that these management rights were an asset of the Trust, which were then provided to interests associated with Mr Lewski for no consideration and then on-sold for $60 million to interests now owned by Lend Lease. We believe that unitholders have suffered enormous losses as a result of these dealings in the management rights. We support the Liquidator's proposal to take legal action against entities associated with Mr Lewski over the sale of the management rights. However, we believe that the Liquidator's proposed partnership with interests associated with Mr Lewski, to take action against Lend Lease over the impact that the sale of the management rights had on the Trust (and with entities associated with Mr Lewski potentially receiving large success fees) is misguided, heavily conflicted and totally inappropriate.

We welcome the involvement of ASIC in this matter and we expect to make further comment on this matter in the near future.

AFR-Article-14-March-2012

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