Prime Trust Action Group Unitholder Update No. 12 – 30 January 2012

Since the Creditors Meeting on 23 November 2011, our main focus has been to continue pressing the legitimacy of the unitholder claims and liaising with the liquidator in relation to various current issues. There are a number of issues that have required careful consideration and we have referred these and discussed these with our own independent legal advisers.

Listing Fee Claim

We have made numerous submissions relating to the listing fee claim and are expecting that the Liquidator will file this matter in Court in the near future.

We have also made detailed submissions identifying those parties we believe should be included as defendants to the listing fee claim and await the Court documents to confirm that a number of our recommendations have been accepted.

Proposed Court Action Against Lend Lease Primelife

Unitholders may recall that Mr William Lewski, the former Managing Director of APCH, the Trust’s Responsible Entity, proposed legal action against Lend Lease Primelife (the current manager of the Trust’s retirement villages) and positioned entities associated with him to fund the proposed action and in exchange receive a success fee from any compensation that may be awarded. The claim against Lend Lease Primelife was quantified as being worth $198m, of which the success fee would be 30% ($59m had the full amount been recovered). We remain strongly opposed to the above proposal as we believe that it is not in the best interests of unitholders and have made numerous submissions and representations to the liquidator on this point.

We note that, to give just two examples, entities associated with Mr Lewski have already received $33m from the Trust by way of the listing fee (a transaction that, as noted above, we are expecting to be challenged in the Courts in the near future) and a further $60m from the sale of the retirement village management rights, and we remain steadfastly opposed to the above proposal and any other proposal which would potentially provide financial benefits to any former director of APCH.

We have made our views on the above proposal known to the liquidator at every opportunity. We strongly believe that the liquidator should have categorically rejected the above proposal from the very start. We have also made it known that, in the event that the action against Lend Lease Primelife is discontinued, we will strongly resist any moves to pass on the associated costs to unitholders.

Please note that we have also made detailed submissions to the liquidator as to how we believe the management rights issue should be addressed for the benefit of unitholders.

Submissions by PTAG

Over the course of the last few months, we have continued to make a series of confidential submissions to the liquidator on certain aspects of the Trust. As many of these submissions may lead to legal action being undertaken, we are unable to provide copies of the submissions to unitholders at this stage. We are particularly grateful for the excellent assistance provided by Clarendon Lawyers in reviewing our submissions and for their strategic advice.

Our research and investigations into the Trust operations continue to uncover additional parties whom we believe acted illegally or improperly and the list of parties to potentially pursue through the Courts continues to grow.

Approach By Liquidator

Late last year, two of the Prime Trust Action Group principals, Roger Pratt and Steve O’Reilly, (“the nominated principals”) were approached by the liquidator to formally assist him in certain investigations into the affairs of Prime Trust. This approach recognised that the nominated principals have a detailed knowledge of the operations of the Trust, having already undertaken numerous investigations into various transactions and are in a position to support him and his staff in progressing these matters without further undue delay.

We are currently considering the merits of the proposal and are weighing up the following factors:
 

  • In order to ensure that any potential conflicts of interest are managed and that the independence of the nominated principals is maintained at all times, all work done by the nominated principals would be reviewed by the management committee of the Prime Action Support Group (PASG);
  • PASG would need to ensure that the investigations continue to be prepared with the best interests of unitholders in mind – in the event that PASG became dissatisfied with the engagement, or in the event that the nominated principals found themselves in an untenable conflict of interest, the particular matter giving rise to the conflict of interest or the engagement would be terminated without notice;
  • Although it is proposed that remuneration would be provided to the nominated principals, this would be at less than half the cost involved in having the work completed by the principals or senior staff of the liquidator;
  • The proposal from the liquidator is expected to apply to only a small part of the time spent by the nominated principals in advancing the unitholders’ interests, with the vast majority of the work done by the nominated principals in relation to the Trust continuing to be done on an honorary basis;
  • The nominated principals will be free to continue to pursue other matters for the benefit of the unitholders independently of the liquidator;
  • The nominated principals would not be employed by the liquidator but rather provide independent consulting services on matters of particular interest to the liquidator;
  • The proposal may enable an acceleration of various legal actions compared to relying on the liquidator’s staff to complete the investigations;
  • There would be no remuneration provided in respect of the large amount of work done by the nominated principals over the last several years.
    • The above matter is currently being considered by the Prime Action Support Group and will be addressed further in the next unitholder update.

      Social Security Entitlements

      We have received a number of enquiries from unitholders about the value that should be ascribed to Prime Trust units for social security purposes. Please note that, as described more fully in the attached documents, the current position is that:

      • the value placed on Prime Trust units by Centrelink should now be the last traded unit price at the time that the Trust ceased trading on the ASX (ie. $0.048 per unit)
      • affected unitholders may contact Centrelink and ask for their entitlements to be updated based on the above unit price
      • Centrelink will automatically update entitlements to reflect the above unit price in March 2012
        • Prime Action Support Group

          We continue to build a fighting fund to strengthen the legal claims that can be made against various parties. To date, we have raised approximately $190,000 but need considerably more to best represent the interests of unitholders and, importantly, ensure that we can readily access proper legal advice to assist us in our decisions.

          We would like to record our sincere thanks to all those who have contributed to date. For those that have not yet done so, we would encourage you to make a contribution (which we would expect to be tax deductible) as soon as possible. The attached document (“Prime Trust Action Group Request for Contributions”) gives details of payment options.

          We suggest that all unitholders consider making a contribution of $100 and we would encourage larger unitholders to consider a larger contribution. In particular, we would also suggest that financial advisers consider a contribution of $100 for each client invested in the Trust.

          We would also like to take this opportunity to wish all unitholders a Happy New Year. We expect a number of significant and positive developments to occur during the coming year. We expect that 2012 will be accompanied by the first recoveries of unitholders’ funds and a detailed plan to pursue, to the fullest extent possible, all parties who can be proven to have improperly contributed to the loss of unitholders’ funds.

          Thank you for your continued support of the Prime Trust Action Group.

          Prime Trust Action Group
          30 January 2012

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