Trilogy Funds Management and commercial mortgage company Balmain NB Corporation have joined forces to take control of the management of the City Pacific First Mortgage Fund (CPFMF) from City Pacific.
Balmain and Trilogy have had numerous approaches by disgruntled investors seeking to 'stop the rot' by appointing an independent fund manager to replace the heavily compromised City Pacific, Trilogy executive chairman Rodger Bacon said.
The fact that City Pacific is a property developer and also a responsible entity for CPFMF already means there was a "structural conflict of interest", he said.
Balmain and Trilogy intend to offer their management expertise to CPFMF investors at a meeting of all CPFMF investors to be called during the first half of May.
Under Balmain and Trilogy's plan, CPFMF's management fees would be reduced to a maximum of 1.5 per cent, 50 per cent lower than the previous charge, Bacon said.
Trilogy would outsource the CPFMF's custody and registry functions to competent independent bodies and complete a thorough asset review of the fund and report to investors on the outcomes.
A legal review of whether the CPFMF has any causes of action to recover assets of the fund from third parties will be completed, and an investors' consultative committee to provide a ready forum for open discussion about investors' concerns will also be setup.
The resumption of distributions and commencement of a redemption program as soon as practical will be established, Bacon said.
CPFMF has been frozen since March 2008 and auditor KPMG recently has reportedly questioned City Pacific's viability.
