INDEPENDENT NEWS

Strategic Finance receivers failed to find credible offer

Published: Fri 19 Nov 2010 01:18 PM
Strategic Finance receivers failed to find credible offer for loan book
Nov. 19 (BusinessDesk) – 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 Feb. 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 of 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 Sept. 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 Jan. 7 after it failed to generate enough loan recoveries, and later had a liquidator appointed.
(BusinessDesk)
BusinessDesk
Independent, Trustworthy New Zealand Business News
The Wellington-based BusinessDesk team provides a daily news feed for a serious business audience.
Contact BusinessDesk
Email:

Next in Business, Science, and Tech

Grey Power Is Disappointed To Learn Of More Bank Closures
By: Grey Power New Zealand
Supply Chain On Brink Of Overload Says National Road Carriers
By: National Road Carriers
Supermarkets Announced As Government’s Second Market Study
By: New Zealand Government
Retail Sales Recover In The September 2020 Quarter
By: Statistics New Zealand
New Zealand Flies Into The Stratosphere
By: Kea Aerospace
Births And Deaths: Year Ended September 2020
By: Statistics New Zealand
Okay Boomer: Kākāpō Wins Bird Of The Year 2020
By: Forest And Bird
BNZ Optimistic About Year Ahead
By: BNZ
Market Study Of Supermarkets ‘positive’ For Shoppers, Manufacturers
By: NZ Food and Grocery Council
Consumer NZ Welcomes Supermarket Investigation
By: Consumer NZ
Supermarket Inquiry Should Look At Govt’s Role
By: New Zealand National Party
Māori Population Estimates: At 30 June 2020
By: Statistics New Zealand
View as: DESKTOP | MOBILE © Scoop Media