ING faces up to irritated investors

ING chief executive Helen Troup meets investors to outline the final offer for the two frozen...
ING chief executive Helen Troup meets investors to outline the final offer for the two frozen funds. Photo by The NZ Herald.
ING chief executive Helen Troup yesterday fronted up to disgruntled investors in Dunedin and Invercargill to explain the latest final offer in the long-running saga of frozen funds.

Ms Troup told the Otago Daily Times that the most commonly asked question was "what happened" to the money invested by more than 13,000 people who had their money locked into the regular income fund and the diversified yield fund since March 2008.

The funds used complicated credit products called collateralised loan obligations (CLOs) and credit funds which use different types of debt and credit risk.

The credit crisis saw the value of CLOs collapse around the world and the ING products were not immune.

Ms Troup said investors understood there was a market downturn but many could not understand how their investments could collapse from $1 to about 20c.

At their peak, the two ING funds were worth about $800 million.

By the time they were frozen that had fallen to $521 million and less than two weeks ago, ING valued them at just $143 million.

Investors have been offered 60c and 62c a unit depending on which fund they are in.

The new final offer remains the same for money but investors can now choose to take it up front or put it in an on-call savings account with the ANZ at a guaranteed interest rate at 8.3%.

The catch is if investors choose to go with the offer they must also waive their right to make a claim or take legal action against ING New Zealand, ING Group, ANZ, their directors and staff and any adviser that recommended the funds.

Much has been written about the role of the ANZ Bank advisers in recommending the product to their clients, but Ms Troup said she could not comment on what advice had or had not been given to investors.

ANZ is a 49% owner of ING.

"I know what we said.

In our disclosure document we made it clear that CLOs did have risk but no-one could have envisaged that every risk would crystallise at the same time."

ING believed what it said in the document, in "normal market conditions". However, market conditions were not normal.

The funds had not met the expectations of either ING or the investors and Ms Troup said she understood why investors were angry and frustrated.

Questions had been asked of ING about the waiver but Ms Troup said the offer was a business transaction and needed to be viewed as such.

Advisers spoken to by the ODT said it was still possible for investors to get more than a $1 back for their investments, once tax losses were claimed back.

While not commenting on that possibility, Ms Troup said the five-year investment option with ANZ represented an opportunity for investors to get most of their money back.

A protest group called Frozen Funds has labelled the waiver agreement as legal blackmail.

Investors are concerned that if they sign the agreement and the Commerce Commission investigation results in a court case and possible compensation, they could miss out.

The commission says its investigation will not be completed in time for the ING offer acceptance deadline on July 13.

Ms Troup said ING did have its supporters who appreciated that the company was trying to find a solution to the problem.

Asked if the solution was only being promoted because of an "investor revolt", she said ING had received "considerable feedback".

She had heard this and was trying to act on as best she could.

"It was the honourable thing to do to face up to investors."

The offer was put before them but it was up to them to make their own choice.

• About 150 attended the ING meeting in Dunedin yesterday. The ODT was told it could attend but not report on anything investors said. The newspaper chose not to attend.

- dene.mackenzie@odt.co.nz

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