Unsolicited offer for St Laurence investors

By Gareth Vaughan Some of St Laurence’s “more naive” investors have received an unsolicited offer from an Australian company for their debentures at the same the failed finance company’s trustee says St Laurence is having to work very hard to meet scheduled moratorium repayments. Matthew Lancaster, head of corporate trust at St Laurence’s trustee Perpetual Trust, told Interest.co.nz St Laurence had sent a letter to stock holders targeted by Stock & Share Trading Company Pty Limited’s offer. It has offered 20 cents per Class A secured debenture,  “well below” St Laurence’s assessment of the value of its Class A debentures. Lancaster said the offer was for about NZ$200,000 worth of stock and the letter sent to targeted investors by St Laurence had the appropriate messages in it. He said he didn’t know anything about Stock & Share Trading, which registered with the New Zealand Companies Office on February 19. The firm’s sole director, John William Armour, has an Adelaide address. Its primary place of business in New Zealand is listed as Auckland’s PricewaterhouseCoopers Tower with the address for the person authorised to accept service in New Zealand listed as Prudentia Law of Newmarket. Lancaster said companies like Stock & Share Trading often tended to target the unsuspecting and the more naive investors on a company’s investor or shareholder register. “I think that’s a failing of the Securities Act, which allows anyone to get a copy of the register and trawl through it and try to take advantage of these sorts of things,” said Lancaster. The unsolicited St Laurence offer follows a Securities Commission warning in January over an unsolicited offer from Marchmont Securities for Strategic Finance debentures. The commission said investors should be cautious of any unsolicited offer to purchase their investments, especially when the offer is well below face value. Meanwhile St Laurence, whose 9000 investors owed about NZ$240 million approved the company's moratorium proposal in June 2008, has made its first five quarterly repayments on schedule with the latest on April 1. Secured debenture holders have now got back principal totaling 10 cents in the dollar and capital note holders have received principal worth 5c in the dollar. Both investor groups have also received interest for the period during 2008 when St Laurence was putting its moratorium plan together. The next repayment is scheduled for July 1. Lancaster said, however, as with other finance companies who primarily loan money to the property development sector, the environment St Laurence was operating in remained very difficult. "As with everyone else they’re having to work very hard to try and achieve what they’ve set out to do. We’re monitoring them closely and are in constant contact with them," Lancaster added. Last year  a NZ$103 million bad debt writedown by St Laurence triggered a moratorium review event, which raised the possibly of Perpetual Trust calling in receivers. That ultimately didn't happen. However, new milestones put in place after the review mean  St Laurence must continue to achieve the rate of return on its assets required for it to fully repay Class A Debentures on November 30, 2013, there must be no further material losses between now and November 30, 2013, and St Laurence must maintain sufficient cash to enable it to make the payments to Class A Debentures that are due before November 30, 2013. This was first published this morning in our Daily Banking and Finance newsletter, which is for our paying subscribers. Find out more here.