A group of investors in the distressed Premium Income Fund (PIF) have commenced urgent legal action against Brisbane-based fund manager Wellington Capital and its directors.
The PIF action group has sought an injunction to cancel units in the fund that were issued in a recent capital raising, and to reverse changes to the constitution that were made without unitholder approval which allowed Wellington to issue units at a discount of 74 per cent.
The action group has also sought to restrain Wellington from counting votes from any new unitholders at upcoming meetings, such as the vote to be held on 16 June where unitholders will vote on whether to replace Wellington with Castlereagh Capital as the responsible entity of the fund.
The injunction also seeks to restrain Wellington and its directors from issuing units pursuant to a rights issue, which had come about at the same time as the capital raising.
PIF action group vice president Charles Hodges said the capital raising was clearly not in the interest of existing unitholders and as such, could be declared invalid under the Corporations Act.
He said the rights issue was also seen as against unitholders’ interests as it effectively forced them to take up the issue if they did not wish to have their unitholding diluted.
The injunction application has been lodged in the Federal Court of Australia at the Victoria District Registry and will be heard today.
