Re-Capitalisation: Commonwealth Bank Finance Package

21 May 2010

Corporate Update

The Commonwealth Bank of Australia (CBA) today agreed to refinance Opus Capital Limited's corporate debt. This refinance package will stabilise the net asset position of the Company and resolve the Australian Financial Services Licence (AFSL) breach which arose over 12 months ago in the midst of the global financial crisis (GFC). With the refinancing complete, we are in discussions with ASIC to confirm ASIC's position on the rectification of the breach.

The stabilisation of our balance sheet and our AFS Licence position is critically important to enable Opus Capital Limited to continue to manage the investments in the Opus property portfolio and to maintain the confidence of our various valued stakeholders.

This positive outcome has been negotiated after a lengthy period of discussions, negotiations and various notifications involving Opus Capital Limited, the CBA and the Australian Securities and Investment Commission. A key part of finalising this position was a cash injection by the Directors and the executives of Opus Capital Limited that demonstrated their commitment to your Company and was part of ensuring a successful outcome with the CBA. I thank the Directors and executives for their support in this transaction.

As envisaged and previously communicated with shareholders, we will be undertaking a further capital raising in the near future to provide the working capital necessary to enable Opus to further strengthen its balance sheet. With the negotiations with the CBA now complete, we can confirm that previous predictions of the level of dilution of the Rights Offer have been scaled back. There will still be dilution for those who choose not to participate in the Rights Offer, however, we are pleased to report that this dilution will be less than the almost total dilution originally contemplated in a number of alternative capital restructuring options.

We remain in discussions with potential equity partners who can bring additional synergies and opportunities to the Opus business and we will keep you informed as these discussions progress.

Speed Bumps Ahead

As I outlined in the March “Quarterly Report” with the numerous challenges brought about by the impact of the GFC on the property and finance industries, effectively managing any lagging issues which precede a stabilisation of our portfolio is critical.

Likely challenges include:

Lower than target unit prices driven by property devaluations.
Continued reduced or suspended Unitholder distribution rates across our funds.
Further debt funding pressures resulting from higher “loan to valuation” ratios (once again driven by property devaluations).
The potential for higher interest rates and interest rate margins which will further impact Unitholder distributions.
Debt funding expiries over the coming six to twelve months which will require renegotiation in a continuing tight credit market. The potential cost of these re-negotiations is likely to be high, with the ever-present risk of banks requiring repayment rather than refinancing.
Difficult leasing markets in certain South-East Queensland markets.

A specific focus in the short term will be capital protection. We will continue to work closely with financiers to ensure that “paper” unit price decreases are not crystallised through the banks requirement for asset sales.

Whilst not desirable, where unitholder distributions need to be reduced or maintained at reduced levels to achieve this goal, this tough decision will be made.

We cannot ignore the fact that the GFC has and will continue to give rise to a changing financial landscape and only those who remain nimble and are prepared to make difficult decisions can adapt and prosper. Opus as a boutique fund manager is nimble, with the recent senior management restructure evidence of our commitment to continued evolution and adaptation.

Light at the end of the Tunnel

As we move into the recovery there are still obstacles on the track ahead. However, we are seeing some positive signs including:

1. Valuations - We believe we are now at or close to the bottom of the cycle and the market will shortly begin to work in our favour.

2. Leasing - We have had some significant leasing successes in the Melbourne market.

3. Credit Facilities - Credit continues to remain scarce and challenges lie ahead. We believe that these challenges can be overcome by ongoing review of our exit strategies and capital management plans and will require Opus to work closely with our bankers and investors to achieve sensible win/win outcomes.

Dean Palmer

Chief Executive Officer