St Laurence may not repay Capital Note holders until 2034

St Laurence has released details of its delayed repayment and restructure plan that includes the prospect of capital notes holders not being fully repaid until 2034, while debenture holders would not be repaid in full for another 13 years. Under the restructure plan to be voted on December 5, investors owed NZ$240 million will see 70% of their debentures turned into 'Class A' debentures and the remaining 30% turned into 'Class B' debentures, which would rank equally with capital note holders. Shareholders would not be paid a dividend until Class A debenture holders are paid in full and payments are up to date for Class B holders and capital note holders. Accounts in the 112 page plan show provisions for bad debts totalling NZ$50.8 million after the March 31 balance date.. The plan details principal payments of 2 cents in every dollar every quarter until November 2011 for Class A debenture holdders, with an additional payment of 28 cents in every dollar by that November 2011 point. Principal repayments would start in April next year and Class B debenture holders would also receive 2 cents in every dollar every quarter, while Note holders would receive 1 cent every quarter. Interest payments for Note Holders will happen after principal is repaid. Interest at a rate of 8% would be paid, with the potential for another rate reset within a year. St Laurence said as at 30 September it had a loan book of 30 loans to 23 borrowers, including 10 first mortgages, 19 second mortgages and one third mortgage. A number of borrowers have both first and second mortgages. The majority of the borrowers want loan extensions to provide them with sufficient time to repay their loans. Meanwhile, St Laurence wants to continue lending. "In addition to managing its outstanding loans, SLL may use money repaid to make new loans. A minimum of 70% of any new loans will be secured by first mortgages," it said. "These may be loans in which SLL's interest as lender may subsequently be sold to other parties, or loans to some of the funds that SLL has invested in or manages, but they will be made only where any proposed lending complies with St Laurences Credit Policy, and all Trust Deed ratios and commitments in relation to ranking of loans." * 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.