PGC’s mortgage fund to be wound up

Pyne Gould Corporation's $56 million Perpetual Mortgage Fund is to be wound up.

The High Court issued a judgment this afternoon which said Perpetual, a subsidiary of Pyne Gould, had 10 days to provide the statutory supervisor Trustee Executors with proposals for winding up the Perpetual Mortgage Fund.

The Perpetual mortgage fund was frozen three weeks ago after a run of requests to withdraw $6m from it.

The fund was worth $56m when it was frozen.

The High Court judgment of Justice Heath said Perpetual was also to provide Trustee Executors with proposals for ''internalisation'' of the Perpetual Cash Management Fund within 10 days.

Justice Heath said he had been told that ''internalisation'' of the cash fund  was intended to restrict units in the fund to investors which were trusts of which Perpetual was trustee or investors who were not members of the public.

The cash fund is at the centre of a dispute between Pyne Gould and the Financial Markets Authority after Pyne Gould director George Kerr's Torchlight Fund borrowed $28 million from Perpetual's cash fund with approval of the Pyne Gould board.

The $28m is considered a related party loan by the statutory supervisor and was not disclosed by Pyne Gould at the time of granting it to Torchlight but Pyne Gould is fighting that contention in court.

The $28m has recently been repaid.

The court order yesterday also said that ''observers'' to the mortgage fund and cash fund were to continue in their roles, even though the$28m lending had been repaid, to protect the interests of existing investors.

Trustee Executors also raised concerns, the court said, about a $3.3m loan that appeared to have been made at a similar time to the Torchlight loan to a company associated with Michael Tinkler, who was then general counsel to Pyne Gould and now a director of Pyne Gould. No written application for the loan was made and no security for it was given. The loan had been repaid.

Perpetual told the court that it disputed a number of matter raised by Trustee Executors including aspects of the loan made to the company associated Tinkler.

Justice Heath said it was not his function at this point to resolve those issues. They could be addressed by the statutory supervisor and if necessary the FMA.