Viaduct Capital loses Crown guarantee
In a surprise move The Treasury late yesterday, withdrew the Crown retail deposit guarantee from Viaduct Capital.
Tuesday, April 21st 2009, 3:42AM
Very little detail has been given on the reasons for the move.
The Treasury said in a statement that “the Crown reasonably considers that the business or affairs of Viaduct are being, or are intended or likely to be, carried on in a manner which:
ii) is otherwise inconsistent with the intentions of the Crown in entering into the Guarantee.”
The guarantee is being withdrawn for all new deposits however money invested with the company while it had the guarantee in place are still covered.
“Eligible deposits up to the date of withdrawal continue to be covered. Deposits covered by the guarantee include the principal sum deposited, along with interest accruing in accordance with the terms of the deposit, up to $1 million per depositor.“
The Treasury says that “Viaduct has not failed and there has been no event of default under the guarantee triggering the claims process.”
The Treasury said that due to commercial and legal considerations no further comment will be made at this stage.
The company said in a statement that it is “extremely surprised and disappointed at the actions of the Crown.”
It intends to find out the reasons for the decision and it intends to continue to operate the business.
Viaduct Capital was created earlier this year after former Blue Chip managing director, Nick Wevers, bought South Island-based finance company Priority Finance.
He said at the time that he wanted to raise $50 million in term deposits and use the money to fund real estate and business investments.
At the time of the deal Priority's loan book stood at $7.39 million.
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