Receivers tip decent return from Provident

Speaking yesterday after being appointed late on Tuesday evening, PPB Advisory's Marcus Ayres said there were about 45 loans covered by debentures in the fund.

He said it was only the fixed term fund that was affected by the court appointment. Three others - the high yield fund, the monthly income fund and one with the Bendigo and Adelaide Bank - were still running.

Close to 90 per cent of the investments in the fixed term investment fund were funded through the issue of debentures worth about $131 million. But last month the trustee of the debenture fund, Australian Executor Trustees, took court action on behalf of investors after becoming concerned about a potential deficiency in the company's net tangible assets.

According to Justice Steven Rares, in the Federal Court, there is a shortfall of about $28 million of the $131 million invested in debentures in Sydney businessman Michael O'Sullivan's Provident Capital.

Last week Justice Rares ordered Provident to freeze the fund and not accept more investments, which it did.

It is understood Provident's fixed interest investments and mortgage lending products are secured against a portfolio of non-conforming mortgages secured over about 46 residential and commercial properties. The biggest, in which about 20 per cent of the fund is exposed, is said to be a construction loan over a new residential development, while the rest are land banks.

The Australian Securities and Investments Commission, which regulates Provident's deposit and lending activities, has been granted status as a "friend of the court".