Prime Trust Action Group Unitholder Update No. 16 – 4 June 2012

Listing Fee Claim

As unitholders will recall, the Supreme Court of Victoria recently determined that the security held by Capital Finance Australia Limited (“CFAL”) extended over all Prime Trust assets, not just the assets associated with the specific retirement villages that are mortgaged to CFAL. As a result of this decision, CFAL now has control over a number of potential legal actions (such actions being assets of the Trust) including the Listing Fee Claim commenced by the Liquidators in March 2012.

On 27 April 2012, the Liquidators lodged a notice of intention to appeal the above Supreme Court decision. We understand that no appeal has yet been lodged. In the meantime, the Listing Fee Claim had been due to return to Court on 24 May 2012 for a directions hearing but was adjourned with consent of the parties. We currently understand that an amended Statement of Claim in respect of the Listing Fee Claim is due to be lodged by 3 August 2012 and that the matter is expected to return to Court for further directions on 10 August 2012.

We would remind unitholders that, in view of the Supreme Court decision, the Liquidators are currently restricted in how they deal with Trust assets and what legal actions they are able to pursue, until such time as liabilities owing to CFAL are repaid and CFAL’s security is satisfied, or CFAL provides consent to the Liquidators taking certain action.

Proposed Sale of Trust Retirement Villages

As reported in our previous Unitholder Update, CFAL is proceeding with the sale of the seven retirement villages over which it holds security directly, and it is understood that the proceeds are to be shared amongst CFAL, its joint financier, National Australia Bank, and the manager of the villages, Lend Lease Primelife (“LLP”). We understand that Expressions of Interest from potential bidders closed on 31 May 2012. We also believe that there may be a further period for interested parties to complete due diligence and finalise their offers, after which a preferred purchaser may be chosen and sale terms may be finalised. We would also expect the Receivers acting for CFAL, KordaMentha, may have reserved their right to reject all tenders and continue with the present arrangements if they believe the tender process has been unable to achieve a suitable price and a better outcome can be achieved by delaying the sale.

As we have stated in previous updates, we believe that LLP does not hold legal title to the management rights which are being sold as part of the above transaction and that these rights must be immediately returned back to the Trust. Accordingly, we object to any part of the sale proceeds being paid to LLP.

Further, we previously understood that LLP was a potential purchaser of these villages. In light of this, we were concerned that LLP’s interest both as a potential purchaser and its role in providing key information to other potential purchasers as part of the sales process, gave rise to an irreconcilable conflict of interest. We now understand that LLP will not be submitting an expression of interest and/or purchase offer, and are pleased that this potential conflict of interest has been addressed.

Daytree Claim

On 5 April 2012, Daytree Pty Ltd, and other entities also associated with Mr William Lewski, commenced legal proceedings against APCH seeking the payment of such part of the $5 million term deposit held by APCH that is no longer required to satisfy the requirements of APCH’s Australian Financial Services Licence. We expect to provide further comment on these proceedings in the next Unitholder Update.

ASIC

We wish to advise that we have continued to maintain communication and make confidential submissions to ASIC on matters relevant to the Trust and the alleged misconduct of various parties. Unitholders may wish to note the latest status report provided on the ASIC website which is available from the following link:

  http://www.asic.gov.au/asic/asic.nsf/byheadline/Prime+Trust?openDocument
 
Fighting Fund

As foreshadowed in our previous Unitholder Update, we have had to review our strategic options following the recent Supreme Court decision. Accordingly we have sought extensive advice on the issues and the most appropriate way of now pursuing these under the revised circumstances. This has involved amending some of our submissions to be presented to litigation funding companies for their consideration. As a result of this need for complex advice, our legal costs have increased appreciably and we expect that our legal costs will be higher than originally envisaged for at least the next few months. We continue to believe that we have identified several strong claims against various parties and we are determined to pursue these to the full extent of the law.

In the circumstances, we feel it is appropriate for us to canvass for further contributions to our Fighting Fund. We would suggest that all unitholders consider making a contribution of $100 and we would encourage larger unitholders to consider a larger contribution. We would also suggest that financial advisers consider a contribution of $100 for each client invested in the Trust.

We are very grateful for the contributions already received from approximately 2,000 unitholders and do not expect these unitholders to make further contributions at this point in time. We would specifically request financial support from those unitholders who have not yet contributed. We note that if all unitholders contributed $100 to the cause, we would have in excess of $600,000 in our Fighting Fund compared to the approximately $200,000 of funds raised to date.

We are pleased to offer the following two payment options:

  Bank Transfer

  Payment may be made by bank transfer to the following account:

  Bank: Commonwealth Bank of Australia
  Branch: Osborne Park
  BSB: 066 140
  Account no: 1032 7118
  Account name: Prime Action Support Group Incorporated

  When making the transfer, please include your telephone number (preferably your mobile number) as the payment reference. In addition, please
  click on the link below and complete a short form in order that we can easily reconcile the payment and promptly issue you with a receipt:

  http://primetrustactiongroup.com/#/contribution-to-pasg/4556580024

    Cheque Payment

  Alternatively, payment may be made by cheque payable to “Prime Action Support Group Incorporated” and sent to the following address:

  Prime Action Support Group Incorporated
  Locked Bag 5000
  OSBORNE PARK WA 6917

  Please enclose details of your name, address, email and phone number (mobile number preferred) and we will promptly issue you with a receipt.

Please note that all funds raised by PASG can only be used for the payment of professional advice and for direct out-of-pocket costs incurred by PASG in pursuing the recovery of unitholders’ funds.

We are unable to provide tax advice but note that contributions by unitholders may be tax-deductible. We recommend that unitholders consult their tax adviser to determine whether contributions may be deductible as an investment-related expense.

We have already raised approximately $210,000 from members and we would like to take this opportunity to provide a breakdown of the costs that we have incurred to date:

Don Steel

As unitholders will recall, Mr Don Steel was one of the three founding Prime Trust Action Group Principals and someone who has actively campaigned against the Trust’s management for several years. Don has been a driving force behind the Action Group and much of the progress we have made, and many of the successes we have achieved along the way, have been due to Don’s unstinting drive and determination and his ability to uncover irregularities in the various Trust transactions. Many of you will have spoken to Don over the phone or in person or received correspondence from Don in relation to various issues that you may have raised.

With his 82nd birthday looming, Don has unfortunately decided to scale back on his involvement in the Prime Trust Action Group but will remain acutely interested in the outcome of the various actions that have been identified. We intend to remain in regular contact with Don and would like to take this opportunity to wish Don and Patricia the very best of health and every success in their future endeavours.

Other Matters

Unitholders should note that we have a new mailing address as follows:

  Prime Trust Action Group
  Locked Bag 5000
  OSBORNE PARK WA 6917

We intend to issue Unitholder Updates at the end of each month and encourage unitholders to periodically check our website (www.primetrustactiongroup.com) for breaking news.

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

Prime Trust Action Group
4 June 2012

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