Reader response - Development wind up

I REFER to the article titled ‘ASIC winds up property scheme’, WA Business News, May 24, page 25. The article presents a very misleading picture of the situation, and this misrepresentation has caused considerable concern among our investors and the business community in general. The facts are that the developing parties, Lake Coogee Estate Manage-ment Pty Ltd, Citibond Finance and Investments Pty Ltd, and ALB Developments No 1 Pty Ltd, initiated court action acknowledging that there may have been a breach of the fundraising provisions of the Corporations Act. The developing parties put forward a proposal that would provide for completion of the development, increased security for investors, and to ensure maximum return from the development. The court was advised that the development was going to be completed on schedule, there had been a significant number of pre sales of lots, and that an investigating accountant’s report indicated that the project was likely to generate returns of between 75 and 80 per cent for investors. The court was also advised that a meeting for investors was held on December 1 2006 to consider a resolution that would enable the developing parties to complete the develop-ment and wind up the scheme on completion in two years. At that meeting, investors unanimously voted in favour of the proposed resolution. The court noted that “the meeting involved a process of detailed explanation, disclosure and frankness” by Lake Coogee Estate Management Pty Ltd, Citibond Finance and Investments Pty Ltd, and ALB Developments No 1 Pty Ltd. The court has now approved that Lake Coogee Estate Development Pty Ltd wind up the development and has given it 24 months to do so. Current expectations, however, are that the development and wind up will be completed within a 12 to 15-month time period. Wind up of the development on completion has always been the project developers’ stated intention. In explaining his reasons for the decision to enable the development to be completed, Justice Nicholson noted that the public interest would be best served by the orders being made. He also noted that investors are fully informed of the issues involved and support the course of action. This resulted in “the existence of exceptional circumstances in favour of the course of action” urged by the developing parties. The court’s decision to allow for the completion of the development was a win for investors and the developing parties. The developers remain confident that the project will be completed on time and that returns to investors will significantly exceed initial forecasts. Brian McNamara - Managing director - Citibond Finance and Investments Pty Ltd