Credit Sails noteholders hit with 70% loss on investment
Investors in NZDX-listed Credit Sails received more bad news today when the company announced that at current values, it has lost more than 70% of their principal.
Proceeds from the Credit Sails notes issue, which attracted $91.5 million from the New Zealand public in 2006, were invested in a collateralised debt obligation (CDO) product that has become virtually worthless due to the global financial turmoil.
Credit Sails informed the NZX today that Calyon, which was the promoter of the debt issue, has advised that the nominal amount of the securities has been reduced by $711 per $1000 note.
This means that investors have lost $65 million so far.
The Credit Sails notes do not mature until 2012, at which point investors will be paid their remaining principal, if there is any.
The Credit Sails listing in New Zealand was underwritten and managed by Forsyth Barr.
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Comments and questions2
This investment, promoted, underwritten and managed by Forsyth Barr has already burned 70% of each investors capital or $70m. I expect that the remaining 30% will also disappear as the default cycle accelerates. That is a disastrous investment whatever way you look at it.
I am personally aware of one investor who was advised to put his entire $240k maturing superannuation into this product.
Why is Forsyth Barr not getting the same scrutiny that the likes of ING, Finance companies, Northplan or Money Managers are getting for their, in some cases lesser, failures?
It seems that once something is listed its failure ceases to be the responsibility of the promoter (First NZ Capital and Feltex is another example). Or is it that losing supposedly wealthy people's money is somehow less of a sin than losing Mom & Pop's money?
Forsyth Barr seem very quiet on this issue - are they hoping no one outside of the investors will notice that they flogged this toxic waste to anyone who would take it - suited or not. If so they are succeeding pretty well to date!!
You seem surprised that brokers are happy to take their cut and don't give a stuff about their investors. It's no surprise. One must do the research oneself, and never take their advice, ever.
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