Latviešu Savstarpējās palīdzības biedrības atbildes

Latviešu Savstarpējās palīdzības biedrības (LSPB) valdes atbildes uz laikraksta „Latvietis“ uzdotajiem jautājumiem:

Atbildes latviski-->

LFS has Supplied Information and Materials

Over the last three weeks Latvian Friendly Society (“LFS”) has supplied information and other materials to many groups of the Latvian community. This has been in relation to the proposal that the residential aged care facility and the retirement village business conducted by LFS be transferred to Uniting Agewell, and that the land be transferred to The Uniting Church in Australia Property Trust (Victoria).

LFS has sent letters, information and other materials to

(a) each Resident at the Latvian residential aged care facility;

(b) each Resident of the Latvian retirement village;

(c) each member of the LFS staff who work at the Latvian aged care facility and the Latvian retirement village; and

(d) also to each Member of LFS.

LFS has also supplied information to many other stakeholders of the LFS businesses, including to the Health Services Union and to the Australian Nursing and Midwifery Union, who represent some of the LFS Staff, and to the Department of Health and Aged Care.

LFS overarching concerns - That the Community is Fully and Properly Informed

The overarching concern of the LFS Board has been to inform all persons in the Latvian community with an interest in the Latvian residential aged care facility and the Latvian retirement village business and other stakeholders about the proposal.

LFS has sought to supply the information in a manner that is accurate, and that does not unnecessarily cause concern or disagreement in the community.

Please Read and Understand the Materials and Information Supplied

Information has been supplied in detail about the proposal.

The reasons for the proposal have been set out. LFS has based its explanations on its assessment of business circumstance, informed by reports commissioned by LFS and also LFS understanding of the businesses and the regulatory environment in which LFS operates.

The Information Memorandum summarises the proposal that is set out in lengthy legal documents. The key elements are described in specific detail. The elements are clearly explained. The legal documents also include customary vendor disclosure as required to be supplied by law, and these provide an accurate description of the land that is proposed to be conveyed. The transaction documents include usual confidentiality clauses, so LFS is not at liberty to freely disclose the transaction documents.

LFS has invited LFS members and anyone else with questions to send these to the dedicated email address for LFS to answer or explain. The email address is ask@latvianfs.org.au.

LFS Supplied Details of the Proposal As Soon As This Was Possible

LFS supplied detailed information and materials as soon as LFS was in a position to do so.

It needs to be understood that, first, agreements with Uniting Agewell were only finalised on 3 April 2025, and LFS had published letters and materials to the Latvian community within three business days of that event. Up until the time that agreements were finalised no details could be supplied.

First, obviously, there was nothing to supply because the details had not yet been agreed.

Secondly, the release of transaction information before agreements were finalised could have adversely changed the negotiating position of LFS.

Thirdly, the LFS Board has been very aware that general non-detailed discussion about a proposal such as the current one without proper detail or even without there being any certainty as to what was the offer would have a material negative effect on the LFS business and operations. For example, the ability to attract new residents to the aged care facility would be affected if there were negative perceptions as to the long term future of the facility. Similarly, there would be very serious risks in respect of the current excellent LFS staff, that is to say if there were uncertainty then it is usual to see significant staff departures and to experience difficulties to recruit new staff - all to the detriment of the LFS businesses.

LFS Has Previously Spoken About Financial and Business Difficulties

It is also important to note that the LFS Board has spoken about the financial and operational challenges faced by LFS on many occasions in the past, including at large and small meetings of residents, LFS members and other stakeholders, and also at formal company meetings, and also by way of articles to Laikraksts Latvietis and elsewhere.

LFS Has Held Many Meetings, and Further Meetings are Scheduled This Week

The LFS Board wish has been that all persons interested are fully and properly informed. This is why LFS has over the last three weeks held many separate meetings for each group of interested persons, and has undertaken in some cases to have small or individual meetings at which the proposal and the reasons for the suggested changes can be explained and the concerns of persons can be listened to and answered, and concerns allayed.

It is also noted that further meetings are scheduled to take place in the week beginning 28 April 2025, including an On-line meeting of LFS Members, the particulars of which have already been sent out to all LFS Members.

LFS is aware that the changes proposed are significant

LFS business is carried on by the management under the supervision of the LFS Board. LFS is a not-for profit organisation, that means that no individual member is entitled to personally benefit from the assets or undertaking of LFS.

Similarly, the LFS Board is a volunteer board, that receives a nominal allowance of up-to $100 per month (effectively a contribution to the travel costs to attend LFS premises and LFS meetings) for the work carried out by the Board.

The changes that are proposed will, if approved by the LFS members, change the ownership arrangements by which the Latvian residential aged care facility and the Latvian retirement village business are conducted.

The importance of the changes is recognised by the LFS Board, and this is one of the reasons why the LFS Members are being asked to approve the proposed transaction. The LFS Board has unanimously approved the transaction, but wishes the LFS Members to equally endorse the changes to give the Latvian residential aged care facility and the Latvian retirement village business the future that the proposal represents.

Uniting Agewell Commits to Capital Investment

At paragraph (i) of the Information Memorandum that has been published to LFS Members LFS has stated that as part of taking over the LFS engagements, Uniting Agewell commits to a significant capital refurbishment program.

More specifically, Uniting Agewell is contractually obliged to LFS to invest further in the aged care facility for the purpose of supplying safe, modern, enjoyable and compliant accommodation for the current and future aging communities and integrating other parts of the community, including the wider Latvian community in Australia by developing and implementing a short term capital investment plan to refurbish the Latvian aged care facility by way of an investment of not less than $6,000,000. This capital plan could utilise the funds for restricted use in respect of Repayable Accommodation Deposits held by LFS, that LFS has not been able to effectively utilise due to the scale and liquidity requirements of LFS. Here it is noted Uniting Agewell assumes the obligation to repay in full and on time the Repayable Accommodation Deposits to aged care facility residents that have paid the same.

But in reality, in addition to the above refurbishment of the existing aged care facility it is accepted that a stand-alone facility with only 54 accommodation rooms does not have scale to ever be efficient.

Uniting Agewell operates 20 aged care facilities, ranging in size from 40 beds to over 120 beds. Uniting AgeWell only has four residential care sites that are smaller in size than Latvian aged care facility - two in Victoria (both in Geelong) and two in Tasmania (Kings Meadows and Strathglen in Rosetta). This provides Uniting AgeWell with a critical mass enabling cross-subsidisation of its smaller sites and significant investment in capital improvements; a capacity that LFS does not have as a single aged care facility operator.

Uniting AgeWell's long term capital plan is to make all its sites viable through capital investment. Over the past decade, Uniting AgeWell has placed considerable focus and resources to ensure its homes have a sustainable future and can meet the changing needs and expectations of the community. This has seen capital improvements undertaken to enhance living and working environments and the completion of new wings at seven sites (including one currently under construction) to increase overall capacity, as well as the redevelopment of two brownfield residential care sites in Preston and Hawthorn which opened in 2019 and 2020.

A New Name Has Been Proposed

I the past, a number of business advisers and parts of the LFS Board held a belief that the word “Latvian” in the name of the Latvian aged care facility and the Latvian retirement village had a negative effect on business and custom.

Over the last several years the concerns have been found not to have foundation, in that when properly presented the independent living units at Latvian retirement village have sold for respectable amounts, and further with proper promotion of the Latvian aged care facility and with proper emphasis on the excellent care reputation to third party care providers the occupancy numbers at the Latvian aged care facility have strongly improved.

Under the proposal Uniting Agewell will carry on the aged care business and the retirement village business under the name “Uniting Agewell Latvian Community”. This is akin to how Uniting Agewell has conducted itself at other centres that it has taken into its control.

What Security Has LFS Been Given

The information and materials supplied by LFS explains that, subject to among other things LFS Member approval, the transfer of LFS engagements would be completed after the approval by the Department of Health and Aged Care to the change in Approved Provider, which process can take up to 60 days. Accordingly, with LFS Member approval, LFS would expect the transfers to be completed before the end of the 2024 / 2025 financial year.

The transfer would include the change to the businesses to Uniting Agewell, and completion of the conveyance of the land. The land is to be transferred to The Uniting Church In Australia Property Trust (Victoria) (“UC Property Trust”), and long term leases are granted by UC Property Trust to Uniting Agewell to give Uniting Agewell proper tenure at the premises. There is no hold-back or mortgage-back or other security to be taken by LFS, and the property transfer is final and absolute upon completion of the transfer of engagements transactions.

However, the transaction documents include the commitment by UC Property Trust not to sell or otherwise dispose or alienate the land on which the aged care facility is based or the retirement village community hall in the medium term, which is 5 years after the completion of the transfer of engagements. In addition, Uniting Agewell commits to remain the sole tenant of these properties from UC Property Trust for this period.

This means that Uniting Agewell has a medium term commitment to the Latvian aged care facility and the Latvian retirement village, that Uniting Agewell needs to fund. In every likelihood, after the medium term the aged care facility will have expanded and then enjoy the benefit of scale such that there is little incentive to change working arrangements.

Further, LFS members and others will have heard the presentations by Uniting Agewell at the meetings that have been held, where the mission and core values of Uniting Agewell have been explained. The Information Memorandum provides almost a page of information about who is Uniting Agewell. The presentation affirmed the similarity of values and approach to aged care by LFS and Uniting Agewell. The Uniting Agewell representatives made it clear that the values and approach are deeply held and maintained by their organisation, and their good reputation would be affected if there were inappropriate dealing even after the contracted medium term.

LFS has selected Uniting Agewell as a counterparty for many reasons, including

(a) Uniting Agewell's demonstrated ability to properly and effectively conduct aged care and retirement village businesses;

(b) the strong balance sheet of Uniting Agewell and its ability to finance projects that LFS is simply unable to fund;

(c) the not-for-profit status of both Uniting Agewell and the UC Property Trust;

(d) the track record of Uniting Agewell with its businesses and operations;

(e) the modern and innovative nature of Uniting Agewell and its full understanding of the regulatory and business challenges of the aged care sector; and

(f) most importantly, the entrenched set of values and principles that drive all of the operations and business of Uniting Agewell, noting these coincide with those of LFS.

LFS Will Continue After the Transfer of Engagements

The proposal with Uniting Agewell does not require LFS to cease its operations. Indeed, LFS will continue as a stand-alone company after the completion of the transaction with it Board and members as at present, but without the aged care facility and retirement village business or land. The organisation will still, however, then hold its PBI status, and other corporate, charity and taxation profile.

LFS will retain a fund of money, principally made up of a bequest, in the order of $1.7 million for the future activities of LFS. These future activities will be the subject of community consultation by LFS after the completion of the divestment transaction.

It is envisaged that LFS will continue to be involved through the scholarships program with the aged care facility, and also through the continued ownership of the many Latvian artworks that are presently at the aged care facility and in the retirement village community hall, and also the so-called amber cabinet and contents. The current LFS Board has a commitment to retain the current PBI status, and accordingly LFS will conduct activities that qualify is as a PBI.

The Constitution of LFS enables this activity, and the objects are respected. Further, the proposal will enable the aged care facility and the retirement village to have a lasting future with Uniting Agewell, which cannot be presently absolutely assured by LFS.

Other Questions Asked By The Editor

The Editor of Laikraksts Latvietis has submitted a list of questions to LFS. We have sought to answer the pertinent questions in the above paragraphs. Some of the questions that were put to LFS were argumentative and seem to provoke dispute - which LFS wishes to avoid. Some questions were based on false premises, and we respect the readers of Laikraksts Latvietis more than to waste columns on correcting false assumptions or propositions. Also, some of the questions asked deserve nothing more than a “yes” or “no” answer, and we have tried to do better by supplying fuller and measured explanations of what has been proposed.

LFS wishes the discussion of these very important issues to be conducted in a civil and informed manner.

Readers are encouraged to read the materials that LFS has sent to them, in particular the detailed and extensive Information Memorandum. This sets out the background to the current LFS problems, the proposed solution by means of the proposal, details about Uniting Agewell and also practical discussion on particular questions.

LFS thanks readers for their interest in these issues, and if there are further specific questions then please send these to LFS to ask@latvianfs.org.au

Davids V Darzins
LFS Director
27 April 2025