Wednesday 9th March 2011 4 Comments
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There was good news and bad news for investors in Allan Hubbard's Aorangi Securities in a report from the statutory managers today.
The managers said they were confident of making a 10 cent in the dollar payment at the end of June and added they had been realising assets without holding fire sales.
But it could take up to four years for the loans and investments to be realised and borrowers were slow to pay interest due.
Some people had borrowed more from Aorangi than they were able to service and in many cases interest had never been paid.
On 20 June 2010, Richard Simpson and Trevor Thornton were appointed statutory managers of Aorangi Securities, a number of charitable trusts and the Hubbards personally.
It was a rare and controversial move by the Government which has been condemned by supporters of the Hubbards.
The managers yesterday updated on the position of Hubbard Funds Management and today updated on Aorangi Securities.
"The Aorangi loan book comprises a wide variety of non-performing assets including farms, commercial property, forestry, infrastructure, personal and business loans and in many cases interest has never been paid," the managers said.
Of the $1.272 million due in the December quarter, only one third, or $456,420, had been received by mid February 2011. Almost half of that interest due was from borrowers related to Hubbard and of the half related to Hubbard, only a third had been paid.
The report gives an example of a property for which rent had not been paid for 12 years and said the roof of the property was unsafe and was now being replaced.
"We have been receiving a monthly rental payment since our appointment and have nearly reached agreement regarding the unpaid arrears. We are however restricted by the Limitation Act in only being able to claim for six years of the unpaid rental."
Overall, the amount due to investors in Aorangi Securities is $96 million and the managers think the value of the portfolio is between $87 million and $97 million. Investors could suffer a loss and Hubbard would receive no money from Aorangi. No interest would be paid with realisations at this level.
The Hubbards have promised to make good Aorangi investors' losses.
The report today said that the formalisation of this was in progress.
A global pledge by Mr and Mrs Hubbard is to be sent to their solicitors to confirm acceptance and to formalise the promises Mr Hubbard has made. There will also be an annulment of transfers of shares to charitable trusts.
"Mr and Mrs Hubbard's interests in various assets are to be transferred to Aorangi for the benefit of investors. These assets have a recorded value in the region of $50-60m, and are already included in the Aorangi portfolio."
The statutory management is costing a lot. In the fourth report a figure of $769,189 was released and today's report detailed further costs of $882,543 to the end of January.
Yesterday a separate report said the value of Hubbard Management Funds fell by $7.15 million in the four months to the end of January.
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