Both Adelaide Managed Funds and Bendigo and Adelaide Bank have delivered tough news to people who borrowed to invest in managed investment schemes (MIS’s) — nothing has changed just because the companies running those schemes have gone into receivership or administration.
Adelaide Managed Funds, as the responsible entity for the Adelaide Man aged Funds Asset-Backed Yield Trust (AYT), told the Australian Securities Exchange (ASX) that it had increased the impairment provision raised against its MIS investments.
It said AYT had invested in a securiti sation program that lent money to indi viduals invested in MIS’s promoted by Great Southern but that AYT had no direct exposure to Great Southern or any exposure to any other MIS provider.
The announcement said Adelaide Managed Funds had noted there had been an increase in the proportion of borrowers who had sought legal advice in relation to their loan obli gations or had chosen not to meet their loan repayments.
It said it had also become aware that as a result of this, the servicer of the loans, Bendigo and Adelaide Bank, had modified its approach to collections and the pursuit of payments from borrow ers whose loans were in arrears.
It said these factors had resulted in the Adelaide Managed Funds board increas ing its expectations of future losses with in the underlying portfolio.
However, in a related statement released to the ASX, Bendigo and Ade laide Bank said the bank’s loans to MIS investors were full recourse loans.
“A borrower’s obligation to repay their loan is not affected by the receiver ship or administration of any company in the Great Southern Group,” it said.
AYT said the increase in its impair ment provision in relation to the loans was $12.4 million, with provisioning now standing at $16.7 million.
It said while the MIS loans were secured by Woodlots and there was full recourse to the underlying borrower, the increase in arrears and expected increase in losses had caused it to increase its impairment provisioning.
