Money is frozen

GIPPSLAND Secured Investments has suspended redemptions on all its ‘at-call’ and ‘term’ investment accounts.

The move was made on Friday when the company advised investors that as a result of a loan review being conducted in consultation with the Trust Company, further redemptions had been suspended.

The mortgage fund company’s default rates for investments have increased more than five-fold in the past two years.

Gippsland Secured Investments’ soured investments have gone from 2.6 per cent of funds lent at the end of 2010 to 14.2 per cent currently, representing about $15 million.

GSI managing director Glenn Sanford said the company regretted having to freeze redemptions.

“We sincerely regret the current situation and apologise for any inconvenience this may cause our investors,” he said.

“Management is working with its advisers to resolve this matter as quickly as possible.

“We expect to be in a position to update investors within the next seven days.”

Friday’s decision follows the announcement made on Wednesday that the company was unable to accept any new investments, including both additions to and the rollover of existing investments, as part of the process of GSI amending its current prospectus and seeking approval of a replacement.

GSI disclosed it was undertaking a review of certain loan assets and security properties which may impact on the value of its total tangible assets and had been assisted in this review by professional advisers.

In a statement the firm said “Given these circumstances, the directors now believe they have no option but to suspend further redemptions on all ‘at call’ and ‘term’ investment accounts”.

GSI claims to have assets under management of more than $150 million.