Challenger Financial Services Group said it would next month propose a restructure of its Howard Mortgage Fund, which if approved, would see around $850 million or 40 per cent of capital made available to unitholders by December 2010.
"We're very pleased to put this plan to unitholders and greatly appreciate their patience while a large number of complex issues were worked through," Challenger Funds Management joint chief executive Rob Adams said.
"If approved, the plan should meet the performance expectations of our loyal, long-term Howard supporters while providing certain liquidity arrangements for both new and existing investors."
Adoption of the "five-point" restructuring plan will see the fund recommence commercial lending at a time when very attractive lending opportunities are available due to prolonged credit supply constraints, Adams said.
"Challenger is also proposing to offer the 30,000 Howard investors with balances of $10,000 or less the opportunity for up to 100 per cent immediate liquidity, with similar opportunities to be repeated annually," he said.
"For all other members there will be no cap on individual redemption requests, allowing investors to apply to withdraw any or all of their capital at any time, subject to pro-rata scale-back in the event total redemptions exceed available liquidity.
"To satisfy any unsated demand for immediate access to capital, the Challenger plan includes a special one-off withdrawal offer of $700 million, following which at least 10 per cent of the fund's assets will be made available for distribution each quarter."
Fund members will be asked to approve the proposal on 28 October 2010.
The $2.3 billion Challenger Howard Mortgage Fund has been frozen since October 2008.
