25 September 1999

I apologise for the delay in getting back to you.  If this is the first letter you’ve received from me, let me bring you up-to-date.  In July and August, my husband and I mailed letters to about 450 of the 1100+ Flat Rock Forests Trust unitholders.  In our letter, we asked recipients to contact us (so that we could know of your interest) and to contact the Trustee (Perpetual Trust) requesting a unitholder meeting.  I personally think it unusual and unfortunate that a unitholder meeting hasn’t been held long before now.  Unitholders are keen to have a frank discussion with the Manager and the Trustee regarding the demise of our trust and the total loss to us all of our investment.

The response to our prior mailing was overwhelming.  We far exceeded the number required by the trust deed to force management to call a special meeting.  Those of you who contacted the Trustee will have recently received the Trustee’s reply.  They made it pretty clear that that they don’t wish to have a meeting and, at this point, they have no plans to call one.

Their unenthusiastic response to requests for a meeting wasn’t unexpected.  My husband and I felt that it was only polite that we ask the Trustee to participate before we made plans to schedule a unitholder meeting without them.  When we wrote them asking their intention with regard to holding a special meeting, they wrote back and asked us to come to their office for a private meeting first.  There, they suggested that they might call a meeting if they could be given a list of questions beforehand for which they could "prepare" responses.  Other questions would be discouraged, if allowed at all.  Frankly, we don’t feel a meeting like that would add much to the general pool of unitholder knowledge.

Meanwhile, since we didn’t really expect the Trustee to call a meeting, we weren’t idle:

	My husband designed a unitholder Access database to make future communications with unitholders and with legal counsel easier.  I’ve completed entry of all updates received from those of you I’ve already contacted.  All respondents please remember to notify me of changes in your email or postal addresses, name, phone number(s), or interest in participating.  For those receiving this letter for the first time, if you wish to be included in future mailings, please let me know via mail, email, or phone.  I need your current address and your phone/fax/mobile number(s).  If you know it, please include the number of units you own (for verification of the accuracy of our records), and the date you acquired them.  And let me know if you might have additional information, articles or correspondence that might prove useful!
	I’ve contacted a law firm that specialises in class actions where individuals band together.  The firm is eager to look into our situation.  I’ve been in communication with them over the past several weeks, and will be meeting with a member of the firm in the next week or so.  They intend to look through the documents I’ve gathered and the case we’ve built thus far and assess the likelihood of our prevailing in court against the Trustee, the Manager, or both.  I will notify you of the results if favourable and call a unitholder meeting.  All who wish can meet with us to discuss the potential case to be built.  You will be made aware of the possible cost to you versus the possible future return of your investment and legal costs.  You can make a decision regarding further participation at that time.  Of course, the more unitholders who participate, the less the cost-per-unit to each will be.
	I’ve read dozens of letters from you, spoken to dozens of you on the telephone, and sent and received dozens of emails to others of you.  I have received fairly thick files from a couple of you.  Thank you for your contributions.  All relevant material has been forwarded to the Serious Fraud Office, and may prove to be of some benefit in their ongoing investigation.
	I have spoken to, and corresponded with, the Serious Fraud Office on numerous occasions.  They cannot, of course, discuss the details of their investigations.  However, I can say that they’ve been active for about a year.  They will be making their decision as to future action within the next few months.

Anyway, I’m sorry for the delay in getting back to you.  There was more up-front work than I anticipated, so it’s taken longer than I thought.  To facilitate communication in the future, I have plans to set up a Flat Rock Forests web page in the next 2 - 3 months.

The question most of you have been asking is: what is the chance of getting some/all of our investment back?  The good news is there is a VERY real chance of our prevailing, at least in some measure.  The case against the Manager and the case against the Trustee will be discussed more fully at our upcoming unitholders meeting.  Want to know more?  If you haven’t already done so, contact me!

What comes next?  After the legal evaluation comes a meeting of unitholders with legal counsel present.  After that will no doubt come several discussions between our legal counsel and the Trustee.  You will be given enough information at the meeting to make a good business decision whether to participate in any possible legal action requiring you to put up any money.  The nice thing about a class action suit is that the amount required from each unitholder should be quite small.  Those of you who have contacted me before don’t need to contact me again (unless you’d like to).  Those who are getting this letter for the first time or who received the first letter but just never got around to responding: please let me know of your ongoing interest and your particulars via mail, phone, or email.  Also, let me know if you think you may have useful information!

Of course, if you’d prefer to be removed from my mailing list, notify me and your wishes will be respected.

Sincerely,

Ruth Hatch
P O Box 6741
Wellington
(04) 385 1327
ruth@flatrock.org.nz

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