PERTH-BASED property fund manager, Aspen Group, has extended its entitlement offer for its ailing property fund after failing to attract sufficient support from investors.
The Aspen Diversified Fund pushed out its deadline by two weeks, to August 7, to entice unit-holders to deposit upwards of $15 million in order to adhere to a new loan facility with lender National Australia Bank.
Aspen Group managing director Angelo Del Borrello declined to comment, but a spokesman said investors had requested more time to understand the offer.
"The support has been very promising," the spokesman said.
The sentiment contrasts with the view of one investor, retired farmer Rosston Vince, of Geraldton, who previously told WA Business News most unit-holders who attended an investor briefing at the Parmelia Hilton Perth were retirees and did not have the money to participate.
It is understood Aspen would consider turning to external investors after the deadline passes even if it raises the minimum $15 million, as it would like to secure $25 million.
Investors who don't participate in the offer will have their investment severely diluted.
The fund launched its entitlement offer in June after getting caught with a highly geared portfolio as the credit crunch took hold, which led to the fund breaking its loan covenants with Nab.
Several property funds have run into similar problems, with the Becton Industrial Fund also turning to an entitlement offer to raise cash.
The listed Aspen Group has ruled out recapitalising the diversified fund on the grounds that its shareholders could not be expected to underwrite all risks linked to the product, as Aspen Group was already the single largest investor ($20 million) and a major unsecured financier.
If the fund opens to external investors after August 7, financial advisers who recommend clients participate will receive a commission of up to 4 per cent of the amount deposited, which is roughly in line with industry standards for capital raisings.
Researcher Lonsec has recommended against new investors participating in the offer should the fund not raise the required capital. The researcher has, however, recommended existing unit-holders take up rights in the entitlement offer because it said the fund was under threat.
A group of disgruntled stakeholders has asked the Australian Securities and Investments Commission to withdraw the entitlement offer, arguing Aspen has other means of reducing debt in the fund.
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