A group of investors in troubled life settlement vehicle ARM Asset Backed Securities wants to be able to scrutinise each proposal from prospective buyers of the fund to ensure the best offer is put to a bondholder vote.
Luxemburg-based ARM issued bonds based on life settlement policies without the appropriate permissions. The bonds were sold through distributors in the UK and Europe and a total of £75m was paid into the bonds by UK investors.
ARM was one of the underlying investments behind Rockingham’s retirement income tri-investment account. Rockingham was fined £35,000 in September for putting clients at risk of unsuitable advice and went into liquidation last month.
The ARM board is currently tendering for a buyer of the assets and liabilities of ARM, which would then restructure the fund.
There are four parties interested in buying ARM, including US life settlement firm Insetco which first announced its intention to acquire ARM assets in September and UK-based company Life Settlement Consulting.
The other two potential bidders have asked not to be named under confidentiality agreements. One of these interested parties is a specialist fund house and the second is a hedge fund with more than $60bn under management.
The ARM Help investors group, which is led by investor Bob Sharpe, has written to the ARM board calling for the details of each proposal to be made available to all ARM investors.
Selected offer proposals are due to be put to a bondholder vote in July. Sharpe says: “The tender document is, in our view, inadequate to the task of producing fully detailed restructuring proposals.”
He says giving ARM investors the ability to assess each proposal is the only way they can be sure they are voting on the offer in their best interests.
Attain Wealth Management managing director Gordon Crothers says: “Investors are well within their rights to push for greater transparency and at the very least the board should explain why certain offers have been discounted.”