Bouquet for St Laurence; Brickbat for Strategic
McDouall Stuart has praised the transparency of St Laurence for keeping its investors informed and meeting specific repayment targets as part of its moratorium arrangement, while it raised questions around the ability of Strategic Finance's ability to meet repayments.
Tuesday, November 24th 2009, 10:15PM
by Paul McBeth
The sharebroker said St Laurence has "specific distribution dates and timetables which gives investors a clear way of tracking progress," in contrast to other moratorium plans.
"St Laurence's commitment to setting and achieving measurable targets and open communications at this stage cannot be faulted," the company said in its weekly newsletter. "Very few of the other companies have shown this level of transparency."
With its long repayment timetable, McDouall Stuart said St Laurence "is on track with its payment schedule."
The newsletter was less glowing for lenders into the property development sector such as Strategic, saying continuing hardship "suggests that the repayment outlooks for these companies look likely to deteriorate further as more time passes."
McDouall Stuart noted Geneva Finance and Beneficial Finance "have been relatively successful" in making repayments to investors, with 50% and 40% of the principal, including interest, paid to date.
"There appears growing confidence that both companies could repay investors in full and continue as viable businesses," the brokerage said.
Since the newsletter was issued, Hanover Finance has agreed to sell its loan books to Allied Farmers for $400 million in stock, while Boston Finance, formerly known as MFS Boston, went down the same route as its sister company OPI Pacific and was sent to the receivers.
Last week, the Reserve Bank said it expects more rationalisation of the non-bank deposit taking sector as companies start to incur higher fees as a result of new prudential requirements and rising costs of the government's retail deposit guarantee.
Paul is a staff writer for Good Returns based in Wellington.
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