One curious aspect of St Laurence's recapitalisation and (very) delayed repayment plan is buried in the body of the 112 page plan that will be voted on by debenture holders on December 5. Founder and CEO Kevin Podmore was congratulated by some for putting up NZ$10 million of property and other assets into the recapitalisation plan, but the plan also includes a NZ$3 million cash payment back to Podmore's Auguste Holdings after the property is contributed. The property being put into the recapitalised St Laurence includes a half share of the Hilton Hotel in Auckland, a half share of the management contract for Hilton Hotel, some St Laurence Property and Finance shares and Auguste's interest in a second mortgage over a coldstore property. "In its report, PwC comments that the "eventual cash that the Company will be able to realise from these assets, particularly the interest in the Hilton Hotel, is highly uncertain in the current environment". That is acknowledged by the directors. The intention is that the interests in the Hilton Hotel will be held by SLL, and sold in 2011," St Laurence said. The assets are said to be worth NZ$17.17 million, minus the NZ$4.17 million of debt taken over with the assets. This leaves NZ$13 million of assets, which is reduced by NZ$3 million through the cash payment back to Auguste. Podmore's Auguste is also providing a NZ$20 million guarantee to debenture holders, which would only be paid out 15 months after the liquidation of St Laurence, with the potential for a further 3 month delay after the demand from the liquidator. "While PwC comments that the guarantee has uncertain value for investors, the report records that it "is appropriate to acknowledge that the guarantee to be provided under the Plan to Class A and Class B Stock holders by Kevin Podmore is a statement of commitment by him," St Laurence said in the report. "It firmly links his interests with those of the investors. Failure to meet his obligations under the guarantee could trigger bankruptcy for Kevin Podmore," it said. * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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