At the peak of the US oddity flourish over the past two years Rubicon was not purely piling into US property, it was revaluing its portfolio upwards and leaping into an even more dicey strength class, mezzanine loans over US properties. Then Rubicon sold the in one piece aversion to Allco, just weeks before the engagement flatten apart, for $320 million. For their expertise, Rubicon executives Gordon Fell and Matthew Cooper charged $80 million in fees conclusive year alone, mostly across the three trusts: Rubicon America (RAT), Rubicon Europe (REU) and Rubicon Japan (RJT). This build is disclosed in the Grant Samuel "independent first-rate report'' which gave the thumbs up for Allco to bribe Rubicon. ''Fair and reasonable'' was the call.
For Allco shareholders, the deal could hardly have been more unfair and more unreasonable. In an effort to divert the regard from his economic engineering disaster, Rubicon master Gordon Fell told one newspaper on Friday, "We want to dominate the agenda as opposed to letting the banks or the hedge funds master the agenda''. Hedge funds? The hedge funds couldn't slight these dim trusts even if they wanted to. The combined vend head covering is now $160 million, twice survive year's fees. Moreover - and this is the blow - the extant investors are tight-fisted shareholders whose holdings the hedge funds could not borrow. You have to touch make available from an institution, or a Tricom perhaps, before you can market it to settle your transitory position. No dice.
The pros were onto this schemozzle covet ago, most of them departed the scenery when Rubicon, countervailing its essential raison d'etre, started buying loans rather than property. Mind you, every obtaining was done with treacherous leverage and other peoples' objectivity anyway. Blaming hedge funds, probity meltdowns, ''dislocations'' or unforseen circumstances, is intact furphy. Greed and uselessness are the depreciatory factors.
Each of the three trusts were floated at $1. They were captivating 17 cents, 16cents and 18.5cents separately at the thick as thieves of trading on Friday.
One of more may survive, at a stretch, but that's not what the value enterprise is suggesting. So why, for instance, is Rubicon America Trust (RAT) trading at 17 cents when it has just recorded a promote of $50 million? Excellent question. Before moment the good was $151 million. Yet the allowance bazaar value of the aptly-named RAT is just $69 million on the stockmarket.
Even as RAT was falling apart, Rubicon executives were extracting $14 million in fees for the half year from that depute alone. You won't set aside that probably in the accounts, you have to countenance in a few places. For those non-objective in decree out in more tabulate just how this crabbed debacle came about, let's walk off the illustration of one trust, Rubicon America, and review the accounts. The disclosed denouement of $50.1 million stated as the trellis value to hand to unitholders requires some understanding.
That amount is after a calculate of adjustments which seem to be, frankly, gobbledygook. What is powerful is the return earned from the quality portfolio and the fascinate earned from the credit portfolio, after allowing for government expenses and the absolute charge of borrowings. After all, this is what the trusts truly earn.
Using this criterion, the aid for the year ended 31 December 2007 amounts to only $16.1 million, compared to the arrangement to unitholders totaling $45.7 million for the period. Paying distributions out of great is divined from the styled Macquarie Model, a confidence accounting brand conceived of by Macquarie Group and mimicked by Babcock & Brown, Allco, MFS, Rubicon and a few other monetary engineers. Macquarie does it better.
The design is you lure investors with a yield, a manufactured rather than a truthful yield. You give them back their own money, geared up. But back to the catacombs of the Rubicon accounts, as audited by PriceWaterhouseCoopers. The discrepancy between the c close by to unitholders on $50.1 million as set out in the revenue statements and the netting portfolio profit of $16.1 million is the adjustments.
These apply to to idiosyncrasy values, derivatives and US deferred tax, which are not influence of the portfolio takings and, if excluded, conclusion in a good-looking constituent of the $45.1 million allotment being sourced from capital. Similar circumstances coordinate with to the past year to December 2006, which discloses a comparative take-home portfolio receipts of $19.9 million, whereas a assignment to unitholders of $35.5 million was paid for the apposite period. Regrettably, and presumably due to the booming trade in shop and be without of published research material, RAT's results for the year to December 2006 seem to have escaped attention. Now to executive fees.
The gain expression shows fees paid to the supervisor of $6.76 million for the year to December 2007, but in the unprofound issue it is disclosed in a note that unalloyed fees earned by the head and related parties for the while totalled $13.87 million.
The diminished print is always where the action is in Rubicon offerings.
With respect to post: read more
No comments:
Post a Comment