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Bridgecorp investors get bad news

Bridgecorp investors have been delivered some bad news just a week out from Christmas.

Wednesday, December 19th 2007, 5:00AM
Bridgecorp's receivers have released their latest update on the state of the company and lowered their expectations over the amount of money they will recover.

Previously they suggested debenture holders will get between 25c and 74c in the dollar back on their investments.

However, they have now lowered that to between 19c and 63c, but closer reading of their report shows the payout could be between 19c and 39c depending on what happens in Fiji.

"Deteriorating market conditions and subsequent events have had a material adverse effect on the receivers' ability to recover outstanding loans and realise assets," the receivers say.

Unsecured creditors can expect to receive nothing for their investments.

The receivers, PricewaterhouseCoopers, say that they are continuing to explore all avenues to improve recoveries, but consider the situation is deteriorating in the current market conditions.

Distributions to debenture holders are uncertain as payouts are dependent on completion and sale of large scale projects.

"The current state of the property development and finance markets, make it extremely difficult to assess the timing of realisations. Resolution of many of these issues could take at least 12-18 months."

One of the big changes in the estimates are around property assets. Bridgecorp recorded, at book value, its property assets as being worth $38.6 million. Previously PWC estimated recoveries to be around $10.33 million. They now say the recoveries are likely to be between $1.9 million and $5 million.

The major influence on recoveries are investments in Fiji.

One of Bridgecorp's biggest assets is the $106.6 million lent to the Momi Bay development in Fiji. The receivers say there are major issues around this lending and the recoveries could be anywhere from nothing to the full amount.

"We are currently working closely with the developer and existing and potential financiers of the Fijian development with the aim of securing funding to complete development works and realise the asset in an orderly manner.

However, until the outcome of these negotiations is known, we believe it prudent to note this amount as a separate recovery item, with a range of nil to $106.6 million."

PWC say that if Momi delivers nothing then recoveries are likely to be between 19c and 39c in the dollar.

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