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ING seeks to wind up distressed credit funds

Wednesday 10th December 2008

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ING New Zealand says it plans to wind up its two distressed credit funds which owe investors more than $500 million and have been suspended for most of the year.

It says that it is recommending to the trustee that the ING Diversified Yield Fund (DYF) and the ING Regular Income Fund (RIF) should be wound up over an extended period of time.

To help with the process ING's shareholders will provide a $100 million loan to provide investors with cash immediately.

This non-recourse loan has to be paid back before the cash generated through the wind-up would be returned to investors.

It is unclear what the company is likely to sell the assets for. As reported earlier this week the DYF fund was down 25.16% in November and a further 6.22% in the first three days of December to have a unit price of 41c.

The RIF was down 27.97% in November, and a further 6.34% in the first three days of December to have a unit price of around 34c.

ING NZ's chief executive Helen Troup says "investors have told us they would like to see a path out of suspension for these funds.

"We are looking to provide an alternative that would give investors clear direction going forward as well as access to some of their money in the short term," Troup says in a statement.

A unitholder meeting will be held before March 31 where unitholders will be asked to approve changes to the funds' trust deeds to allow this managed wind up to occur.

"The cash option that ING will be proposing is aimed at helping investors as we sell assets over an extended timeframe. It does not reflect the level of any final returns to investors," Troup said.

A formal offer cannot be made until the detailed terms have been agreed to.

Assuming the trustee accepts the recommendation, all the details about the proposed wind up options including the relevant terms and conditions will be provided as part of an information pack and sent to investors over the coming months. The information will include a third party report to help investors make an informed choice.

COMMENT: The difference between Hanover and ING

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