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Strategic Finance bank debt knocks down first repayment to investors

Strategic Finance Ltd, the finance company which owes about 15,000 investors some $325 million, will miss its first repayment to stockholders after bank debt took precedence over mum and dad investors, and will likely face a review of its moratorium.

Tuesday, January 5th 2010, 11:43AM

The finance company managed to pay in full the $25 million priority debt facility to the Bank of Scotland, though "sufficient loan repayments have not occurred to enable SFL to be in a position to make the first payment to stockholders" scheduled for Jan. 7, chairman Denis Thom told investors in a letter.

Last month, he said the company needed to complete several sales before everything shut down over the Christmas holiday period to meet the payment, and that Strategic may have to increase its provisioning.  

"Not all of the conditional and unconditional sales that were required to settle to enable loans to be repaid and provide SFL with the required cash proceeds have occurred," Thom said in his letter.

"The SFL board has informed the trustee that it considers it likely that a ‘review event' under the moratorium arrangements will occur on 7 January 2010 and this has already resulted in the commencement of constructive dialogue between the company and the trustee."  

Strategic froze repayments in August 2008 before a majority of investors voted in favour of a moratorium in December of that year. In August last year, the company posted a full-year loss of $175.7 million after it was forced to write down $77.6 million worth of bad debt and increased total impairments to $146.5 million.  

The company has at least 14 days to negotiate with trustee Perpetual Trust once the review event is triggered, though Thom expects more time will be required.  

During this period of negotiation, Strategic will continue to try and realise its assets to "make the targeted January payment to investors."

Under the terms of its moratorium, the company had to repay at least 9% of total principal moneys owed, including the debt facility with the Bank of Scotland.  

Last month, Thom indicated the board's concern with the "higher incidence" of prior ranking mortgages exercising their rights, which would force lower-ranked creditors to boost provisioning.

Strategic wrote a number of second mortgages on resort, residential and commercial property developments in Auckland, Queenstown and Fiji during the property market boom.  Representatives from Strategic and Perpetual Trust were not immediately available for comment.  

 

Businesswire.co.nz

« Hanover posts $102.9m loss, writes off $308.9mSouth Canterbury's fluid statements show greater impairments »

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.75 6.65
ASB Better Homes Top Up - - - 1.00
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BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

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