KEY POINTS:
ING will hit the road today in a bid to convince financial advisers to support its $100 million loan proposal for investors locked into two frozen funds.
But five advisers have labelled the plan a "disgrace" and are gathering their own support to force the company to come
up with a better solution.
ING announced plans for a managed wind-down of its Diversified Yield and Regular Income funds last week with the proposal set to go to a vote before the end of March.
The two funds have been frozen since March when ING stopped 8000 investors from getting their money out.
At the time the funds were valued at $521 million but they have since shrunk in value to $273.5 million.
As part of its plans, ING said it would give investors a $100 million payout soon after the vote.
But the money is only a loan and it would have to be paid back with interest from the wind-down of the funds' assets before investors see any more of their money back.
Malcolm Eves, spokesman for the five advisers, described the proposal as a joke and said it was an insult to investors as they were being asked to pay for their own money to be paid back in the form of interest on the loan.
"We don't accept the $100 million loan is by any means anything but disgraceful."
The group have estimated investors could get back as little as 15c in the dollar if they accept the proposal because any money realised from the wind-down would have to go towards paying off the loan first.
Eves said the group had got together at an adviser conference and then written to ING about its concerns.
It followed that up with a meeting on Friday with chief executive Helen Troup, the trustee Paul Bedbrook and ING Chairman Mike Smith.
The advisers told ING the $100 million loan was $600 million short and it wanted to see a "100 per cent solution" for investors.
"It is absolutely unacceptable and we won't be supporting or recommending it."
Eves said ING had a responsibility to stand by its product.
He said the move had disempowered advisers who could no longer recommend clients get their money out.
"ING promoted the product to advisers as a low-to-medium-risk investment that could be used as an alternative to finance companies, mortgage trusts and cash investments. The marketing material was all about liquidity - of course there has been no liquidity."
ING New Zealand chief executive Helen Troup said the company had received a range of views but would not be discussing them with the media.
