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Investment Default

22 April 2010

Collateralised Debt Obligation (CDO) investments held by the Circular Head Council have suffered a $2.0 million dollar cash loss.

Media reports in 2009 suggesting a cash loss were incorrect as all principal components were intact and had been treated as an accounting transaction "book loss". The Council has now received confirmation that an investment had defaulted, in effect a cash loss has occurred.

The Council placed $4.5 million in three AA rated investments with the Commonwealth Bank which sold the collateral debt obligations, or CDOs, to third parties.

It is understood that two other Tasmanian Councils have also experienced a similar circumstance.

The Council has agreed to examine the options available to pursue recovery.

Further enquiries may be directed to Greg Winton by telephoning 6452 4800.

Authorised for general media distribution by Greg Winton, General Manager, Circular Head Council on 22 April 2010.