Hubbard managers split Aorangi in three

A fifth report on Allan Hubbard’s companies shows mixed results with slow interest payments hampering recoveries to Aorangi Securities while Hubbard Management Funds has improved its performance.

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The statutory managers from Grant Thornton said Aorangi borrowers were a total of $5 million behind in payments wit the September cash collection still $2 million short and a further $3 million in arrears.

“Aorangi’s ability to recover full repayment or realisation of investments is significantly reduced because the level of overall indebtedness of the entity,” the report noted.

“Only one in five borrowers is paying any interest on their loans to Aorangi.”
Aorangi was placed in statutory management in June. As at March investors were owed approximately $96 million.

In the latest development the statutory managers have divided the assets into three categories:

• 31 mortgage loans with a value at August 2010 of $59 million;

• 15 direct investments by Aorangi valued at $47 million. These are made up of 12 farm loans, two commercial property investments and $10 million in Southbury Group Limited, which is unlikely to be recovered because of its receivership; and

• a loan to Te Tua Charitable Trust of approximately $24 million.

“Aorangi’s ability to recover full repayment or realisation of investments is significantly reduced because of the level of overall indebtedness. Only one in five borrowers is paying any interest on their loans to Aorangi,” the managers said.

“Requests will go out shortly for payments due on 31 December and we are guardedly hopeful that the level of collection will be greater this quarter. With dairy cash flow expected to be stronger over the next six months, we anticipate both better returns and a payment of arrears,” the managers said.

Meanwhile, Hubbard Management Funds has performed well in October and now stands at about $56 million.

“The nature of the portfolio has led to significant fluctuations in value. Some of the movements in value experienced have been as much as $1 million in a day.

“Much of this last month has been spent working towards the ultimate distribution of assets. This has centred on a court application to confirm the actions being contemplated to manage the fund in the interests of the investors.”

A key focus now was seeking court confirmation to enable fair allocation of the fund between investors and the subsequent distribution of the assets to investors.

“We expect to file these applications with the Court by March 31, 2011.

All up about 700 investors in Aorangi and HMF have had their funds frozen with limited redistributions until some investments can be sold.

The Serious Fraud Office has been investigating Mr Hubbard and is expected to report soon on whether it will seek to lay any charges against him.

Mr Hubbard's most high-profile venture, South Canterbury Finance, went into receivership at the end of August sparking a payment from the Crown of over $1.7 billion under the deposit guarantee scheme.

The SFO is also investigating related party transactions between South Canterbury Finance and entities associated with the directors.