One of our members wrote to our Orange Finance Trustee Company. After two months they have finally responded.
Having done nothing positive for us over the past few years we would like to see them acting positively in our interests now. Unfortunately, from these responses it seems they will not be looking to canvas our views regarding extending the moratorium and nor are they pushing hard to get things resolved in our best interests.
Answers supplied by Stewart Lockhart, Corporate Business Manager, Covenant Trustee Company Limited
Question 1. Matrix Funding are charging $27,000 per month, and have only recovered 37% of principal so far. What staff do they have, and how is this $27,000 per month justified. As shareholders we have a right to know, and should be given a breakdown of costs.
Answer: The management fee was appropriate at the time the moratorium was entered into in August 2009. Indeed, it compared very favourably with other moratoria, and the receivership option.
Question 2. Will Covenant as Trustee be automatically extending the moratorium for 12 months, or will you allow shareholders a vote on whether or not to extend it. If you are extending it what level of fees do you think are justified?
Answer: Regarding the management fee , in March this year Covenant met with Orange and amongst other things we discussed an adjustment to the management fee. The fee reduction discussions have not been concluded yet. In March this year Covenant also had initial discussions to extend the moratorium for a further year as from 31 July 2011 .The Company expects to have paid 42 cents in the dollar principal by 31 July 2011. (see the moratorium report dated May 2011 for further details.) The decision to extend the moratorium will be made in July this year, and at that point, an announcement will be made to the debenture holders. You may recall the terms of the moratorium which commenced in August 2009 - that the trust deed does not require a further meeting of debenture holders to give effect to an extension to 31 July 2012.
Question 3. If the Moratorium is extended a further year until August 2012, and the full amounts have still not been recovered by then, what is the outcome for shareholders regarding monies still to be recovered, possibly still a further 4 years away?
Answer: if the moratorium is extended to 31 July 2012, and at its conclusion there should be debenture holder moneys outstanding the options to consider will be a further moratorium or to appoint a receiver.
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