KEY POINTS:
Investors in two suspended ING funds are being told that if they wait five years, they can choose to be guaranteed a minimum price for their units which will see them at least get "the bulk of their investment" back.
Last March, ING New Zealand announced it was suspending withdrawals from its ING Diversified Yield Fund (DYF) and the ING Regular Income Fund (RIF), which then together had $521 million under management. As at November 30 that figure had fallen to $273.5m.
Today ING said investors in the DYF and RIF funds would be receiving a proposal under which they could choose to be guaranteed a minimum price in five years time for their units.
The five-year price for the DYF was 83c per unit, with 86c per unit for the RIF.
"This will see most investors receiving the bulk of their investment returned," ING said.
"The five-year price is based on the amount of money that current investors put in, subtracting their total gross distributions, and dividing that total by the number of units held."
Alternatively, investors who would like access to their money sooner could opt to "cash out" their units for a lower amount equivalent to the guaranteed amount in today's dollar terms. That was 60c per unit for the DYF and 62c per unit for the RIF.
The cash out option was based on a net present value calculation of the five-year price, ING said.
"Unprecedented market conditions have created this unique situation in which these funds have been suspended for almost a year," ING NZ chief executive Helen Troup said today.
"We are now giving investors certainty, choice and equality regardless of how markets perform over the next five years."
ING NZ's shareholders had committed to underwriting the offer.
"The shareholders will shoulder the market risk, but if markets recover more than anticipated, then the investors will benefit from the upside."
The funds were suspended as a result of the global credit crisis, which meant the underlying assets of the funds could not be accurately priced after the market for structured credit assets virtually disappeared.
"Over the past year, ING NZ has sought to find an outcome that recognises not only investors' expectations, but also the reality of the extreme market conditions," ING said.
"This has been complex to achieve as markets have continued to deteriorate and remain difficult."
The proposal was subject to trustee consideration and approval, and would require investors to approve changes to the trust deed.
The formal proposal will be sent to investors and their advisers mid-May and a unit holder meeting is scheduled for the week starting June 15.
ING NZ will be holding briefings in the main centres for advisers and investors before the unit holder meeting.
It said it was also making arrangements to engage an independent third party who would be available for any investor who wanted help assessing their options.
In December ING NZ announced it wanted to wind up the two suspended funds and was lending the funds $100m so they could give the 8000 investors affected some cash upfront.
- NZPA
