Opportunistic Grab For Strategic Finance

MEDIA RELEASE
27 January 2009

Opportunistic Grab For Strategic Finance

Perpetual Trust says the Marchmont offer to acquire up to $5m face value of Strategic’s debenture stock at 10 cents in the dollar is opportunistic

Perpetual Trust, the trustee for Strategic Finance, is concerned that an offer that has been mailed to Strategic Finance’s investors by Marchmont Securities Trust (“Marchmont“) to acquire up to $5 million of their debenture stock for 10 cents in the dollar appears to be opportunistic.

“We believe the offer takes advantage of the present uncertainties that exist concerning Strategic’s future, and may seriously undervalue the amount that investors could otherwise receive from Strategic,” said Matthew Lancaster, head of Perpetual Trust’s corporate trust business.

“Despite the uncertainties that currently exist concerning Strategic’s future and the amount that its assets will realise, Perpetual considers that the Marchmont offer is likely to seriously undervalue the amount of each investor’s investment in Strategic.”

”Investors should not accept the offer until they have obtained financial advice from their financial adviser, accountant or solicitor, in the light of their present circumstances and position,” Mr Lancaster said today.

Perpetual Trust said that investors need to understand that under the Marchmont offer they will:

• receive only 10 cents for every $1 that they invested with Strategic (that is 90% of the capital that they invested will be lost);

• only receive that 10 cents in the dollar once a transfer of their investment to Marchmont has been registered, but it is not clear within what period that will occur;

• receive less than 10 cents in the dollar if Strategic makes a payment to investors before any transfer of their investment to Marchmont has been registered;

• not receive payment of the amounts that should have been repaid to them in September and December 2009;

• not be entitled to any further payment from Strategic at all; and

• no longer be secured debenture holders in Strategic, and so they will be unable to vote at any future meetings of Strategic’s investors.

At present, because Strategic has not made any repayments to its investors (apart from amounts repaid to Bank of Scotland in respect of its priority debt) and the value of Strategic’s loans has fallen below the level required under its moratorium, Perpetual Trust; as the corporate trustee, is engaged in negotiations with Strategic on the best way forward.

“Our negotiations with Strategic have not yet concluded, but they are progressing and an announcement of their outcome is expected to be made shortly. Investors should seek good advice before accepting the Marchmont offer at this point in the process,” concluded Matthew Lancaster.
ends

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