Hubbard suffers total loss with Aorangi
Allan Hubbard loses $60 million in Aorangi - how well do his investors fare?
Allan Hubbard loses $60 million in Aorangi - how well do his investors fare?
Statutory managers appointed to Allan Hubbard’s Aorangi Securities are now predicting investors may not receive a full recovery of their investments - despite Mr Hubbard agreeing to subordinate his $60 million stake.
According to the sixth statutory managers report by Grant Thornton, the mortgage investment firm owed investors $96 million and the estimated realisable value of the portfolio was between $87 million to $97 million.
“Based on these estimates, investors could suffer a loss and Mr Hubbard would receive no money form Aorangi. No interest would be paid with realisations at this level,” the report said.
It could be four years before realisations are completed, with only a 10c payment being delivered to investors by June.
While Mr Hubbard’s subordination gesture may give comfort to investors, statutory managers were less complimentary about his related-party lending.
And while only half of Aorangi’s loans are to parties related to Mr Hubbard, this half repaid only one-third of the amount due. In total, of $1.272 million of interest payments due in the December quarter, only $456,420 was paid.
“These borrowers are for the most part struggling financially and are unable to meet their commitments. The total interest arrears are now $3,900,787. It is of particular concern that only one third of the borrowers associated with Mr Hubbard are meeting their full commitments,” the report said.