Statutory Managers release 6th Aorangi Securities Ltd Report

9 March 2011

It could take up to four years for the loans and investments of Aorangi Securities Ltd to be realised, according to the sixth Statutory Managers report, due to many non performing loans and investments requiring intensive management.

The statutory managers report that they have discussed this realisation process with Mr Hubbard. They are confident of making the next distribution of 10c in the dollar by the end of June 2011.

News was also much better in Te Tua Trust where the current estimate of the expected recoveries from the loan book is $8.741 million, an increase from previous estimates of $5.884 million. This reflects the increased number of borrowers now making regular repayments.

“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,” they said.

Because of the long-standing support Mr Hubbard has given borrowers over the years, the statutory managers have asked these people for an early repayment of their loans where it is considered they are in a position to do so.

“We regret to report that such requests have been unsuccessful to date.

“In certain circumstances we have issued formal demands for repayment, issued Property Law Act notices or have entered into repayment arrangements with borrowers for collection over a period of time,” they said

Of concern to the statutory managers is the continued slow payment in interest due. Of the $1.272 million due in the December quarter, only one third ($456,420) had been received by mid February 2011. Almost half of that interest due was from borrowers related to Mr Hubbard and of the half related to Mr Hubbard, only a third had been paid.

“These borrowers are for the most part struggling financially and are unable to meet their commitments. The total interest arrears are now $3,900,787. It is of particular concern that only one third of the borrowers associated with Mr Hubbard are meeting their full commitments to Aorangi.

“A number of non Hubbard related borrowers have also not met their interest obligations. It is our view that they have been placed in this situation by borrowing more from Aorangi than they are able to service.

“While this is unfortunate, the borrower’s obligations need to be met to enable investors to receive their entitlement. With the support of Mr Hubbard, legal action has been taken against a number of borrowers to address the non-payment issue.”
The report goes on to highlight a number of specific loan and investment issues.

“We are constantly reviewing the potential realisation of the Aorangi portfolio of investments. Many of the properties have been valued by independent valuers and we are assessing the financial position of the borrowers by examining their latest financial statements.

“The amount due to investors is $96 million. The preliminary estimate of the realisable value of the portfolio is in the range of approximately $87million to $97 million. Based on these estimates, investors could suffer a loss and Mr Hubbard would receive no money from Aorangi. No interest would be paid with realisations at this level.”

No further comment will be provided.

ENDS

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