Northern Crest to repay Lombard investors $1 million
Blue Chip remnant Northern Crest Investments will repay Lombard Finance investors $1 million over two years to square off any outstanding debt to the failed property financier.
The repayments follow a settlement agreement with Lombard Finance and Investment receivers, PricewaterhouseCoopers, to remove doubt over potential for claims linked to Northern Crest’s unsettled loan facility with Lombard.
The payments will start this month.
The issue stretches back to a guarantee Northern Crest made when Lombard financed the sale of Northern Crest’s New Zealand operations to companies controlled by its former senior managers.
In a statement to the Australian Stock Exchange, Northern Crest, once known as Blue Chip Financial Solutions, said it had taken the position its parent company did not guarantee the facilities claimed by Lombard in respect to obligation to its New Zealand subsidiaries.
“The settlement has been reached with the receiver of Lombard to put the matter fully and finally beyond doubt and to derive certainty in respect to the future direction of Northern Crest.”
Lombard collapsed into receivership in early 2008, owing 4400 investors $127 million.
Former Cabinet Ministers Doug Graham and Bill Jeffries are among Lombard directors facing civil and criminal charges relating to the Lombard Finance collapse.
The Securities Commission is seeking up to $1.3 million in penalties in over the alleged failure in early 2008 to adequately disclose the impact of the financial position Lombard Finance and Investments.
Last month, PWC wrote to Lombard investors forecasting a 15% to 24% return to secured debenture holders on their original investment, and said they had found more ground for claims.
Sydney-based Northern Crest Investments is in High Court battles over a pair of statutory demands from across the Tasman, totalling more than $A600 thousand.
One is expected to lead to liquidation proceedings that could thwart Northern Crest’s capital raising and attempt to relist on the Australian Stock Exchange, having been suspended in 2008 for failing to pay listing fees.