The Chief Executive Officer
Commonwealth Bank of Australia
Dear Sir
Re: CITY PACIFIC LIMITED FIRST MORTGAGE FUND
I/We, the undersigned, being City Pacific First Mortgage Fund Unit holder/s request the Commonwealth Bank of Australia reconsider any further renegotiation of City Pacific's finance facility over the Fund and request you exercise your rights over the security held. This would enable the appointment of a Voluntary Administrator to administer our Fund in a non-prejudicial way for the following reasons:
1. We fear that while the Commonwealth Bank of Australia continues to renegotiate the finance facility, City Pacific Limited will continue to trade as a non-liquid entity thus negating responsibilities and obligations by the Fund Manager to the Fund's Unit holders, by allowing the Fund Manager to continue to withhold distributions and redemptions. We believe that while the Fund continues to operate as a non-liquid enterprise with no new business initiated and consequently no further income being generated the Fund's asset base will continue to be depleted on a daily basis.
2. We fear by prolonging the Fund's clearly failing existence through continual refinancing, with interest payments going far beyond initial projections will inevitably and ultimately be at the expense of the asset base and not in the best interests of Unit Holders.
3. City Pacific Limited has direct conflicts of interests arising out of the fact that they are seeking to preserve income streams from the First Mortgage Fund. The Directors and Officers having personal benefits flowing to them arising from the continuation of their exorbitant management fees
4. A high proportion of the CPFMF's funding is being loaned to related entities of City Pacific Ltd that appear to be struggling to meet their commitments.
5. City Pacific raised in excess of $200 million from the Commonwealth Bank of Australia without consulting Unit holders. Although this appears to be constitutionally legal, City Pacific, whose principle activity is lending money, has compromised members equity in the Fund by giving security to outside bankers and thereby placing us in a perilous position by becoming a debtor.
6. The Fund's various Product Disclosure Statements dated 1999-2007 that induced Unit holders to invest in the CPFMF stated "that all loans in the Fund are secured by Registered First Mortgages over real property'' and the Public Trustee of Queensland would be the Custodian of the Fund. This is no longer the case.
7. The Fund is to provide Unit holders with regular income from a pool of high yielding property loans secured by registered first mortgages. This is no longer the case.
8. Redemptions have been frozen and distributions stopped for over six (6) months. City Pacific Ltd, through the FMF, continues to fund existing selected projects to completion thus Unit holders are ranked third in line, behind the CBA and Developers for benefits from the FMF, which is not in Unit holders best interests.
Clearly, it is not in the best interests for Unit holders to have the terms of the present facility with the bank renegotiated. Would you please consider our Predicament.
