Battle for control of funds gets heated

The battle for control of the LM Investment Funds has heated up with both sides accusing each other unfair play and even the postal service has come in for criticism.

Wednesday, October 31st 2012, 7:01AM

Currently Trilogy Funds Management is trying to get control of two funds, the LM Wholesale First Mortgage Fund and the LM Protected Australian Income Fund which feed into the frozen LM Mortgage Income Fund.

Many New Zealand investors have money in the Mortgage Fund via investments in the Currency fund.

Trilogy planned two meetings for tomorrow to try and gain control of the feeder funds which would then allow it to get the prize – management of the Mortgage Fund.

It has had strong support from three institutions with significant holdings in the currency fund.

However Trilogy announced it had cancelled tomorrow’s meeting of Currency fund unit holders for a number of reasons.

It blames; International Mail delays, late notice from LM that they would not accept online proxy votes, a failure by LM to release the fund accounts for the year ended 30 June 2012; and a refusal by LM to defer the meeting for the Currency Protected Fund in order to give advisers and their clients more time.

Trilogy says, with regards to the Currency fund, “we have had very strong investor support with over 85% of votes in favour of the resolutions.”
LM though has struck back and said Trilogy has released many unfactual statements to media and our fund advisers and investors.

It questions whether mail delays were the real reason for the meeting cancellation and alleges LM doesn’t hold an appropriate licence from the regulator, ASIC.

“Trilogy have postponed the meeting…due to what they claim as mail delays, however it can only be due to not having the appropriate licence, or not having enough votes. Abstaining from voting is voting for LM.”

LM says that "Trilogy announced in a statement that LM opposed the adjournment, despite contacting us yesterday and our responding that it was not our right to consider, accept or reject the adjournment, as it is Trilogy’s meeting, not LM’s."

The news is better for Trilogy in regards to the Wholesale Fund. It says that the proxy votes "comfortably tallied to greater than the 50% threshold required to pass the resolutions to remove LM as the Responsible Entity of the Wholesale Fund and to appoint Trilogy as the new manager of the Wholesale Fund."

LM has struck back and claimed Trilogoy's win is a hollow victory: "The “institutional vote for the LM Wholesale First Mortgage Income Fund was influenced by two large wrap platforms comprising a total 43.3% holding, whilst only five material investors voted in favour of Trilogy as replacement Responsible Entity. The action of the wrap funds represents around 10% of holders on the LM Wholesale First Mortgage Income Fund, despite 90% of holders not voting for Trilogy."

Despite the Trilogy plans to declare the vote and take over the fund.

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