A dispute between the board of finance company St Laurence and its trustee received another instalment today, following yesterday's move by trustee Perpetual Trust to put the company into receivership.In the latest development, a statement issued today on
A dispute between the board of finance company St Laurence and its trustee received another instalment today, following yesterday's move by trustee Perpetual Trust to put the company into receivership.
In the latest development, a statement issued today on behalf of the St Laurence board said Perpetual Trust had substituted its view for those of the investors in respect of the investors' own money.
"Perpetual has declined to give us reasons for its decision and did not consult with us as to the likely outcomes for investors before making it," St Laurence managing director Kevin Podmore said in today's statement.
The issue blew up publicly on Wednesday when St Laurence announced that due to the "extremely" difficult property market, it would soon be in a position where it would run out of equity and as a result would not be able to meet some of its obligations under a moratorium agreed to by investors in late 2008.
St Laurence said it proposed to hold a meeting at which investors would be asked to approve a debt-for-equity swap.
In the Wednesday statement, St Laurence said that if the debt-for-equity proposal was not approved St Laurence would be placed in receivership.
But later on Wednesday Perpetual Trust made its own announcement that St Laurence's letter updating investors had been sent without the trustees' approval. That approval was required by the deed under which St Laurence was operating.
"This letter did not have our approval, in fact we specifically asked that the letter not be sent," Perpetual Trust head of corporate trust Matthew Lancaster said.
Then yesterday Perpetual said it was appointing Barry Jordan and David Vance of Deloitte as receivers of St Laurence to protect the interests of 9000 investors owed $245 million. So far St Laurence had paid $10m to investors under the moratorium.
"In appointing receivers today we are ensuring that a person independent of the current management and directors will oversee the orderly realisation of assets on behalf of investors," Mr Lancaster said.
He repeated the statement that the letter St Laurence sent to investors did not have 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. There were a number of reasons for this, principally that the information contained in it was selective, and potentially misleading as a result."
In today's St Laurence board statement, Mr Podmore said the board was "extremely disappointed that the trustee has deprived investors of the opportunity to decide themselves on whether our proposed debt-for-equity swap plan is in their best interest".
The letter St Laurence sent to investors "was neither misleading nor did it require trustee approval. The trustee should not suggest otherwise," Mr Podmore said.
The directors thought the plan they intended to put to investors in June would provide a significantly better overall result for investors than a receivership.
Investors still had the right in a meeting to change the trustee's decision if investors considered that appropriate, Mr Podmore said.
The receivership does not include the companies which are the managers of The National Property Trust and Irongate Property, which is seen as avoiding any adverse effect on the continued operation of those contracts.
