Fortress notes now worthless

Investors in Macquarie’s Fortress Notes were given some bad news yesterday when it was revealed the notes were worthless.

Wednesday, October 22nd 2008, 6:58AM
In an announcement to the NZX Macquarie Fortress Investments said the net asset value of each note was “zero cents.”

“The deterioration in global financial markets has continued to affect the traded prices of US Senior Secured Loans (Senior Loans) in the Fortress portfolio. Presently, the cumulative market value of Senior Loans in the Fortress portfolio is below the total debt facility balance,” director Peter Lucas said.

He said that despite this situation and even if there is a ultimately a shortfall between the total debt facility balance and the cumulative realised value of Senior Loans in the Fortress portfolio, holders of Macquarie New Zealand Fortress Notes will not be required to fund this shortfall.”

Last year Macquarie refinanced the notes for a period of eight years until 2016.

Lucas says under this arrangement, the finance provider has no rights to require an accelerated repayment of the debt facility.

“The final return to investors continues to depend on default and recovery rates of Senior Loans in the Fortress portfolio.”

Macquarie New Zealand Fortress Notes were issued at $1 each in May 2005. Between 800 and 1000 New Zealanders have invested $30 million in the notes. The notes are listed on the NZDX and on the Australian exchange.

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