Wellington, June 9 NZPA - The unit price being offered to investors in two suspended ING funds is fair and reasonable, independent experts Grant Samuel say.

In March 2008, ING New Zealand announced it was suspending withdrawals from its ING Diversified Yield Fund (DYF) and the ING Regular Income Fund (RIF).

Under a revamped proposal, released last month, an ING NZ subsidiary will be provided with up to $400 million to enable it to buy units at 60c for each DYF unit and 62c per RIF unit.

Unit holders have the option of putting proceeds from the sale of the units into a cash deposit account with ANZ -- 49 percent shareholder in ING NZ -- for five years.

The account will have an interest rate of 8.3 percent a year, and money can be withdrawn from it at any time.

Investors who accept the offer will have to give a release agreeing not to start or continue any claims or legal action related to the funds.

The funds were established to invest mainly in structured credit instruments known as collateralised debt obligations (CDOs), but deteriorating conditions in global credit markets severely affected the ability of investors to sell or trade CDOs and the value of the securities.

Grant Samuel said only very limited reliable information was available on which to form judgments about the full value of units in the suspended ING funds.

Acknowledging it was confronted by a range of limitations, Grant Samuel said it calculated net asset values of 24c per DYF unit and 21c per RIF unit as at December 31, 2008.

The offer price was substantially higher than the calculated net asset values, and was fair and reasonable, Grant Samuel said.

The analysis did not take into consideration the value of the release, and unit holders would need to assess for themselves the value of the release based on their own circumstances.

In its opinion, the face value or amount in local currencies that the funds paid for their securities was now in most cases not going to be recovered, Grant Samuel said.

With the option of putting their funds into the bank account for five years, unit holders were being offered the best of both worlds -- ready access and a high interest rate.

Grant Samuel calculated that if unit holders were to leave all the offer price and all interest earned in the account for five years, the amount on deposit would equate to between 78c and 91c per DYF unit and between 80c and 94c per RIF unit. The amount would depend on each investor's effective tax rate.

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