Connaught announced in May that it had contacted investors to tell them the fund was unable to pay their scheduled quarterly interest payments after bridging lender Tiuta told the asset manager it would be late paying its own interest payments.
It was looking to resume normal dealing on the fund by May 14, however, the firm’s board of directors agreed at a meeting on May 21 to continue the suspension of the net asset value of the fund and the issue and redemption of units in the fund.
Connaught believes that by bringing Tiuta into the investment adviser’s group and under its control it will significantly assist in the winding-up process and the realisation of the fund’s investments, with a view to maximising unit-holder returns.
As part of this, Connaught is proposing to acquire the entire issued share capital of series two from Tiuta.
It is also believed to be acquiring the share capital of income funds series one – an estimated £118m, but this has not yet been confirmed by Connaught.
Series two is made up of £12m in securitised assets and £5m in cash.
In light of the proposal to wind up the fund, the annualised interest rate payment to unit holders scheduled for July 2012 will not be paid.
Furthermore, as any future dealing in the fund is now unlikely, the administrator will be returning any subscription monies received and held by it pending the next dealing day to applicants.
The FSA issued a warning to people who have invested in two funds from Connaught in May 2011. The regulator said it believed the way they have been advertised could be misleading.
Earlier this week, Tiuta announced that it was launching a number of new products after securing a new funding line from a central London investment fund.