An unnamed institutional investor looks set to bail out the managed investment scheme of embattled financial services group City Pacific.
In a statement to the Australian Securities Exchange, City Pacific revealed the investor will co-invest about $100 million with the City Pacific First Mortgage Fund in a portfolio of large first mortgage loans from the fund at their book value.
The investor will become a joint first mortgage lender with the fund on the portfolio of loans. The co-investment will be in stages, with the initial $30 million made prior to 14 March 2008 and the balance to be received during the second half of this month.
"City Pacific as the responsible entity of the City Pacific First Mortgage Fund considers the co-investment by the institutional investor is validation of the quality of the fund loan portfolio and City Pacific," the statement said.
"The co-investment arrangements provide that both the institutional investor and City Pacific will share management fees arising from this $100 million loan portfolio and this will not materially affect the profitability of City Pacific."
The listed property group also expected to have finalised a number of other transactions, and despite earlier this week undertaking a voluntary suspension of its shares in readiness to announce deals, no agreements have been signed.
"At this stage the relevant parties have not agreed appropriate terms and as such negotiations have for the moment discontinued," the company said.
"City Pacific is in the business of identifying early stage property-based projects to which it can add value for the benefit of its shareholders. City Pacific then looks to joint venture these projects with significant partners or alternatively exit the project on favourable terms."
City Pacific is the responsible entity and manager of the mortgage fund, a registered managed investment scheme with about $1.15 billion in gross assets under management.
