CIY 0.00% 3.6¢ city pacific limited

watch out michael west

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    Newsletter just received from CIY


    City Pacific Limited


    City Pacific Limited and City Pacific First Mortgage Fund


    Notwithstanding City Pacific Limited’s continuing profit upgrades and performance over the last 10 years we are the subject of continuing rumour, innuendo and misinformation.

    The company has maintained growth, increased profits and paid healthy dividends and distributions to its shareholders and investors despite industry events such as the demise of certain debenture issuers and more recently the sub-prime credit crisis and MFS restructure.

    In more recent times anonymous emails and what appears as a concerted campaign has been compounded by certain media coverage that has used selective information and omitted important and relevant information that has been publicly available.

    Journalist Michael West is the author of a number of articles which have appeared in various newspapers over several months, the most recent this morning.

    These articles relating to City Pacific’s well being are in our considered view, at times, misleading and unfounded.

    Despite repeated offers Mr West has consistently declined to interview members of City Pacific’s executive team and has more recently declined requests by City Pacific to meet with him claiming he is “not in the business of writing herograms”.

    Mr West’s articles and certain emotive comments made directly to our investors and documented by our legal team are causing City Pacific, our investors and shareholders damage.


    LEGAL ACTION


    City Pacific will today instruct its legal advisors with a view to commence legal proceedings against Michael West and those publications that carry his commentary.


    CASH ON HAND


    City Pacific and the City Pacific First Mortgage Fund (First Mortgage Fund/ the Fund) are, and always have been, separate entities. The Public Trustee of Queensland, one of the largest trust offices in Australia, as the Custodian of the Fund, holds separate from City Pacific the assets of the Fund on behalf of the investors.

    City Pacific is the manager of the First Mortgage Fund and had cash on hand of $2.7 million at 31 December 2007 with gross assets of $449 million including current assets of $141 million.

    These numbers are separate to the cash and facilities available within the First Mortgage Fund which at 31 December 2007 stood at $46.9 million cash and $50 million in undrawn bank facilities. The Directors considered this a prudent cash and liquidity position for the Fund at 31 December 2007.

    City Pacific stands behind the strength of the First Mortgage Fund which it has successfully managed for over 10 years. The consistent turnover of the loan book averaging 80% per annum gives the First Mortgage Fund the ability to concentrate on funding projects in areas where the property market and population growth figures are strong. The success of the First Mortgage Fund is driven by City Pacific’s ability to lend to the right developments secured by a registered first mortgage over real property in Australia.

    As at 31 December 2007 the First Mortgage Fund had $326 million of loans due back to the Fund by the end of March and a further $707 million by the end of the 2008 calendar year. These loans are all expected to be repaid in full in the normal course of the First Mortgage Fund’s operations.

    As at 31 December 2007 the average loan to valuation ratio for the First Mortgage Fund, if all loans were fully drawn, would have been 74.3%.


    MFS


    As announced on 27 February 2008, the Board of City Pacific has resolved that, after conducting due diligence, it will not make an offer for any assets owned by MFS Limited’s financial services business.

    City Pacific conducted the due diligence with a view to determining the value of the assets of the MFS financial services business. It was City Pacific’s intention to acquire the assets to add value for both City Pacific shareholders and the MFS investors under their current circumstances.

    However, the City Pacific First Mortgage Fund has a clear strategy of only investing in registered first mortgages over real property in Australia in locations where the property market is strong and supported by population growth and the assets of the MFS financial services business did not meet this strict criteria.


    MARGIN LOANS


    The Directors advise that CEO Phil Sullivan has a margin loan representing less than 5% of his holdings. Arrangements will today be put in place to pay this loan out at no detriment to City Pacific and without the sale of City Pacific shares. No other member of the City Pacific Board or executive management team have margin loans.

    CITY PACIFIC LIMITED

    Phil Sullivan
    Managing Director & CEO
 
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