Sharechat Logo

No buyers for Strategic Finance loan book

Friday 19th November 2010

Text too small?

Receivers of finance group Strategic Finance couldn’t tempt any potential buyers of the loan book to make a credible offer and will continue with recoveries on behalf of 10,000 debenture holders owed $368 million.

Offers received “fell short of even our ‘low’ estimate of gross recoveries from the loan book,” John Fisk and Colin McCloy of PricewaterhouseCoopers said in their first six-monthly report. “We consider that the best possible outcome for secured debenture investors will be achieved via the receivers continuing to realize the loan book.”

Bidders made low-ball offers because of the high proportion of second mortgages, the threat of enforcement action by prior-ranking creditors and the complexity of arrangements with Strategic affiliated companies. About 58%, or $131 million, of the net loan book as at February 28 is in second mortgages. The receivers’ preliminary estimate for gross recoveries, prior to costs, is 12 cents to 35 cents in the dollar.

The report shows the proportion of Strategic’s lending into formerly hot parts of the property development market, with a concentration of loans in Queenstown and Northland, where other distressed lenders are trying to recoup their money. Money was lent on bare land development sites where further funding was required and other creditors had a prior call, the receivers said.

In addition, loans were made on overseas property, such as in Fiji, where recovery was hampered by a difficult political situation.

Of Strategic’s 87 loans, about 25 were to borrowers either in liquidation, receivership or had property that was in the process of being sold by the first mortgagee.

For the period of the receivership from March 12 to September 12, some $4.87 million was recovered from the loan book, while payments for various costs and fees amounted to $2.6million, leaving net funds received at about $2.98 million.

Strategic was sent to the receivers in March by trustee Perpetual Trust, ending a moratorium arrangement that had been in place since December 2008. The finance company missed its milestone repayment on January 7 after it failed to generate enough loan recoveries, and later had a liquidator appointed.



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Acceleration of expressway will be transformative for Northland economy says EMA
The Warehouse Group - Proposed Scheme of Arrangement
The Warehouse Group - Proposed Scheme of Arrangement
Winton announces timing of its Annual Results
Fletcher Building Announces Director Appointment
Meridian issues new demand response exercise notice to NZAS
CRP - Chatham Closes Private Placement of Shares
General Finance - Olympic Term Deposit Promotion featuring a Special Bonus of 0.1%
July 22nd Morning Report