Perpetual tips St Laurence into receivership
Property investment company St Laurence has been placed in receivership by its trustee a day after the company put forward an alternative debt for "equity" swap.Perpetual Trust has appointed Barry Jordan and David Vance of Deloitte as receivers
NBR staff
Thu, 29 Apr 2010
Property investment company St Laurence has been placed in receivership by its trustee a day after the company put forward an alternative debt for "equity" swap.
Perpetual Trust has appointed Barry Jordan and David Vance of Deloitte as receivers of St Laurence, which owes 9,000 investors $245 million.
The move to receivership comes after St Laurence indicated yesterday it was insolvent and could no longer meet its scheduled moratorium payments to investors.
The company, led by managing director Kevin Podmore, attempted to put forward a proposal for investors to swap debt for equity in a related company.
Receivership was the only alternative, the board had said.
Today, Perpetual Trust said it made its decision after considering St Laurence’s actions.
“In our view, the appointment of a receiver answering to the trustee and investors will provide more certainty than any other proposal,” said Perpetual’s Matthew Lancaster.
He said receivership provided independence from the current management and directors in realising assets for investors.
“We are also ensuring that the personal guarantees provided by the Corporate Guarantors and Mr Podmore remain in place rather than being released as they would have been under St Laurence’s proposal.
“This may provide some additional protection for investors, and we feel that the Guarantors owe it to investors to permit their ability to honour the guarantees they gave them to be tested in the normal way.”
NPT and other contracts ring fenced
Mr Lancaster said the trustee had ensured that the management companies which have management contracts for the National Property Trust and Irongate Property Limited had been kept out of receivership.
“This will avoid any adverse effect on the continued operation of those contracts.”
Investors voted in December 2008 for a moratorium which gave the company until 2013 to pay back much of the monies owed to investors.
The balance owed to investors might not have been paid until 2021 in some cases, and 2034 in others.
To date St Laurence has paid $10 million to investors but recently the company has indicated that it would soon become insolvent.
St Laurence defied Trustee
Mr Lancaster said that a letter to investors that St Laurence released yesterday was without the required authorisation of the trustee.
“We had expressly stated in a conversation with the managing director Mr Podmore that it should not be sent.”
The main reason was the information contained in it was “selective, and potentially misleading,” he said.
“Under the debt for equity swap which relocated investors into a new company the existing management would have remained in place, and in that and other respects St Laurence’s proposal provided no certainty that the very disappointing performance of the company in the recent past would improve.”
He said the new company would need to borrow in order to trade which would further dilute value for existing investors.
”In addition, there is no certainty that there would be a market for the shares that would be issued to investors – there is just further uncertainty around whether, or when, investors might receive further payments.
“None of these aspects of the proposal were satisfactory to us.”
NBR staff
Thu, 29 Apr 2010
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