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St Laurence quits lending, withdraws prospectus

St Laurence majority owner and managing director Kevin Podmore says he is relieved to have made the decision to quit the lending market, and he doesn't intend to re-enter it again.

Wednesday, June 25th 2008, 10:58AM
When asked about the decision he told Good Returns he felt "a bit of relief actually."

"We grappled with whether we should do this," he says. But "I do believe it's the right thing to do."

The lending operations make up about half of St Laurence's business with the other bits being funds management, management of the National Property Trust and syndicates.

Currently St Laurence has around 40 loans totaling $160 million and around 9000 investors.

The problem for the group is simple. It can't get money in the door either from investors or from people loans have been made to.

Podmore says a year and a half ago reinvestment rates were around 64%, in April they were around 50% and this month they "plummeted" and are "below 20%".

Meanwhile people loans are having trouble raising cash with developers being unable to sell properties and sales not settling for a variety of reasons.

Podmore says St Laurence isn't technically in default, however modeling suggests if there is more slippage things could change.He says the company has around $10 million cash in the bank, but that figure is way down on the $50 million it has previously recorded.

Podmore says debenture holders will be asked, in August, to approve a repayment plan which could see it taking two years for full payouts to be made.

If the plan isn't approved St Laurence "could go into receivership".

He says the decision yesterday was being made early to ensure there is value in the company's assets. His view is that companies which leave it too late "disapate value."

From Podmore's perspective he is doing what he thinks is right for the company, investors, staff and shareholders.

The goal is to repay everyone and have something left over for shareholders. He says if other assets, such as part of the management contract for NPT have to be sold to refund investors then that is what will happen.

Podmore says it has taken 14 years to build the business up and he would like to see some return.

He says he has no intention of re-entering the lending business and wonders about the future of finance companies. When asked about the future of the sector he said: "I think it will disappear."

While some, notably the big ones, will probably survive, he felt property based companies will struggle and those in the consumer lending space will not be able to compete with GE.

"The majority of players will disappear," he predicts.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 3.05 2.99 2.99
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.49 2.69 2.79
Median 4.55 2.94 2.99 2.80

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