Strategic Finance put into receivership owing NZ$417 mln (Update 3)

By Bernard Hickey Watch on our video page here Watch on YouTube here Perpetual Trust has announced it has put Strategic Finance into receivership, ending months of uncertainty about whether it might be bought or merged with another finance company. (Adds details, background, writes through) The property financier that includes former All Black captain Jock Hobbs among its directors owes NZ$417 million to 13,000 investors. This makes it the second biggest finance company receivership after Bridgecorp collapsed in July 2007 owing NZ$458.7 million to 18,000 investors. It is one of 48 finance companies or investment funds to have collapsed, been liquidated, gone into receivership or to have been put into moratorium since May 2006. Collectively they owe investors around NZ$6.2 billion in 187,000 accounts. See more in this Finance Company deep freeze list here. Perpetual Trust, which acts as the trustee for debenture investors, said it had appointed John Fisk and Colin McCloy of PricewaterhouseCoopers as receivers. Strategic Finance was heavily involved in financing the Soho Square development on Ponsonby Rd in Auckland, the Sentinel Tower project in Takapuna and the Fiji Hilton project. Strategic Finance stopped making interest payments and stopped lending in August 2008, before convincing investors in December 2008 to agree a moratorium delaying repayment for five years rather than immediate receivership. However, it missed its first repayment due on January 7th this year and declared fresh losses of NZ$107 million on property loans it couldn't refinance. The default on the payment and a slump in loan values below 75% of liabilities gave Perpetual the right to put it into receivership at that stage. Perpetual said it had tried to sell or merge Strategic to avoid receivership through January, February and early March. Interest.co.nz understands that there were as many as 6 options on the table and that South Canterbury Finance was one of the potential buyers. "Following the announcement of those two Review Events in January this year, a number of offers from third parties for restructuring and/or sale of its assets were received by Strategic," Perpetual said. "Perpetual Trust, as trustee for investors, is now satisfied having completed a thorough review that receivership is a better option for investors than proceeding with any of the proposals," it said. Receiver John Fisk said receivership provided the greatest certainty for investors. “The receivership also brings certainty to unsecured creditors’ claims that were not subject to the moratorium and provides options to review cost structures that were not available to management under the moratorium," he said. Strategic Finance chief executive Kerry Finnigan was paid a salary of NZ$550,000 in the year to June last year despite the moratorium being in place. More details for investors are available at PWC's website or on a dedicated help line at 09 355 8030.