11 September 2009
Unitholder Update
and Hardship Applications
We are currently completing a review of the assets of the Pacific First Mortgage Fund (Fund) to definitively determine the financial status of the Fund and its capacity to meet redemption requests. As you are aware redemptions were frozen in March 2008 and distributions were frozen in June 2008. Currently none of the mortgages which comprise the Funds assets are producing any significant income. The default rate is effectively 100% and we are working tirelessly to protect the Fund's interests. Additionally, pursuant to agreements entered into by the previous manager, the Fund has significant commitments to other financial institutions which must be satisfied.
The review of the Fund's assets will be complete by the middle of October 2009. We also believe that arrangements in respect of the Fund's indebtedness to its financiers should be finalised at about the same time. In the interim we will be establishing mechanisms for amending the Constitution to allow redemptions at the prevailing unit value. As most unitholders would understand the Fund currently has a fixed unit redemption price of $1.00. This is significantly greater than the current unit value and effectively prohibits any redemptions from occurring as this would have the effect of treating the remaining unitholders unfairly.
In relation to the hardship application process we do not anticipate being in a position to consider making hardship redemptions under ASIC's hardship provisions until the Fund's available liquidity is once again restored to a satisfactory level. We will notify you immediately when the constraints referred to above that prevent the processing of hardship redemptions are removed.
Please be assured that we remain focussed on protecting the Fund's investments in the interests of all unitholders. As you are no doubt aware the current market conditions are not assisting the remediation of a Fund that has been severely impacted by the previous management. These factors require the Fund to maintain a measured approach to its operations and financial position. We continue to take appropriate steps to progressively re-establish the Fund's liquidity and value over time.
We appreciate that this has been a very difficult and distressing time for all unitholders. Please be assured that BalmainTRILOGY will continue to use its best endeavours to commence a payment regime for all unitholders with a clear emphasis on unitholders suffering particular hardship.
We will continue to keep you informed.
BalmainTRILOGY