Provident debenture holders’ meeting set for second week in August

Thousands of small investors who have their funds tied up in Provident Capital debentures will have to wait until at least the second week in August for any update on their investments.

An exact date for the meeting has not yet been confirmed.

Receivers Phil Carter, Tony Sims and Marcus Ayres of PPB Advisory are currently carrying out an assessment of the failed fund manager and non-bank lender’s financial position ahead of an August meeting in Sydney.

At the “information session” debenture holders will have the opportunity to put questions directly to the receivers, and they will also receive an update on the status of the receivership.

About 3,000 debenture holders are owed around $128 million by Provident Capital, with redemptions frozen following the appointment of receivers.

Over $22 million worth debentures were due to reach maturity by the end of June 2012, with close to $54 million falling due by December 2012.

Debenture holders rank as secured creditors of Provident alongside Adelaide and Bendigo Bank.

December 2011 Provident Capital financial statements show that Adelaide and Bendigo Bank provided $91 million in funding to Provident.

Receivers are currently preparing an application to the NSW federal court for guidance as to how interest repayments and other distributions are to be made to debenture holders, as there “presently exists a conflict within the trust deed”.

The receivers expect that debenture holders will “suffer a shortfall on their total claims”, but are confident that it distributions will be made “in the near future, albeit at a reduced rate”.

Debenture holders were offered annual returns as high as 9% or more for three- and five-year fixed-term investments, with the money lent to property developers at high rates of interest.

Provident was placed in a court-ordered receivership on July 4 following an application by Australian Executor Trustees Limited (AET), a trustee for Provident Capital debenture holders.

The receivers also released information about two other mortgage funds.

The Provident Capital High Yield Fund

• Was closed on June 25
• Any investor who invested after this date will be refunded.
• Distributions for the month of June 2012 have been paid.
• Redemptions have been temporarily suspended.
• Funder under review and receivers yet to confirm the position regarding future distributions.

The Provident Capital Monthly Income Fund

• Was closed on June 25
• Any direct investor or investor directed portfolio service (IDPS) operators who invested after this date will be refunded.
• Distributions for the month of June 2012 have been paid.
• Redemptions have been temporarily suspended.
• Receivers currently reviewing the overall future strategy of the fund.
• Unit holders will be contacted in due course with a further update regarding the fund’s future.