However, several changes have encouraged him to write to investors. These changes include the transfer and repayment of the mortgage, the appointment of a receiver and the status of Metropolis sales.
About 1800 investors, including Somers-Edgar, put $21 million into Pacific Properties (Metropolis) Ltd bonds in 2001, and they expected to be paid 14% interest annually.
However, Pacific Properties defaulted on interest payments and currently investors are owed their capital and interest.
They won’t be getting any interest on this investment and may yet get some of their original capital back (estimates have gone as high as 80c in the dollar, but are now in the 50-60c range).
"It is now an appropriate time for the bondholders to consider whether legal action could improve the recovery of more of our funds,” Somers-Edgar says in his letter.
He says a meeting of bondholders could direct the trustee, Trustees Executors (formerly Tower Trust) to fund an investigation into whether legal action could be taken against any of a number of parties. These include the issuer, Courthouse Capital, (including the developer Andrew Krukziener), the organising broker UPC Securities (including the company’s directors at the time), the trustee, Trustees Executors and Money Managers, which sold most of the bonds.
While Somers-Edgar believes there is a case against one of the parties, getting the necessary evidence to prosecute is difficult.
“I can see a case but I can’t see the evidence,” he says.
Somers-Edgar says he has already spent a considerable sum of money with lawyers and accountants “to see whether any course of action is available”.
“You can be absolutely certain that if I had evidence of wrong doings which would support our case against any party I would already have started action,” he says in the letter.
“I can’t find anything so have had to walk away.” Despite that he is still asking investors what they want to do.
In his letter Somers-Edgar expresses concerns about the way the media have handled the story, and the role Trustees Executors.
Somers-Edgar says that there is a conflict of interest when the trustee is also a competitor.
“While the trustee has a role to play we think it is important that you know that they are also are our opposition,” Somers-Edgar says in the letter.
(Good Returns was unsuccessful yesterday at getting comment on this criticism from Trustees Executors).
Somers-Edgar also makes it clear that Krukziener appointed the trustee, not Money Managers, and that “the Metropolis Bond was promoted by UPC Securities, an associate of Marac at the time the bond was issued, not Money Managers.”
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