Lombard Finance makes first payment to debenture holders
Lombard Finance, which was put into receivership by its trustee, has made its first payment to debenture holders of 6.5 cents in the dollar.
Friday, December 4th 2009, 7:22PM
by Paul McBeth
The receivers for the failed finance unit of the company formerly chaired by Doug Graham still predict they can recover between 17% and 29% of investors' original investment, though they say the "property market continues to be challenging and volatile."
"Achieving loan recoveries remains difficult due to market conditions and in certain cases, enforcement action by prior ranking security holders has resulted in minimal or no recoveries for LF&I (Lombard Finance & Investment)," said PricewaterhouseCoopers receivers John Fisk and Colin McCloy in a letter to investors. "We appreciate that this is a difficult process for secured debenture investors and are therefore pleased to be in a position to now make an interim distribution."
Trustee Perpetual Trust put the finance company into receivership in April last year after it hit funding problems on its property lending, and had about $15 million exposed to Blue Chip NZ. Perpetual's decision to shoot down Lombard Group's proposed moratorium has left the parent-company in a tenuous position around its viability as a going concern, and it is currently negotiating a reverse takeover deal with Perth-based insurance and underwriting agency Australian Consolidation Insurance.
McLoy and Fisk said nine of the finance company's 27 loans had been realised, and as at November 13, net proceeds of the loan book were at $9.9 million. The original value of the book was valued at $136.7 million in March last year.
The Inland Revenue Department agreed to waive any preferential claim over the $7.3 million interim payment, though it is still conducting its GST audit.
The payment will be made on or around December 17, and will leave some $120 million owing to about 4,400 investors in the company.
Paul is a staff writer for Good Returns based in Wellington.
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