Strategic Finance in receivership

Perpetual Trust has called in receivers after reviewing failed finance company Strategic Finance.

The trustee said after giving the company time to consider several debt-for-equity and/or restructuring offers from [unnamed] companies and submitting the best proposals to Perpetual, it was satisfied receivership was the best option for investors.

In a statement issued late this afternoon, Perpetual said it had appointed reveivers John Fisk and Colin McCloy of PricerwaterhouseCoopers.

Strategic directors were Kerry Finnigan, former All Black captain Jock Hobbs, Graham Jackson, Marc Lindale, Denis Thom and David Wolfenden.

"Perpetual Trust believes that receivership is the best option because the receivers will be focused on achieving the best outcome for investors, and in particular that it is expected ultimately to provide better returns for investors."

Strategic has about 13,000 investors with investments of $417 million.

One investor, who wished to remain anonymous, said the receivership was "far from ideal" but better than taking another six months for an outcome.

Strategic issued a statement saying the board was disappointed with the outcome.

"The board considers receivership to be very destructive to value and detrimental to the repayment of monies to investors."

Two proposals were well advanced and would have provided for an "immediate cash payment, ongoing income and the potential for maximum recovery for investors," they said.

Apparently Bank of Scotland, as the largest debenture holder, supported both transactions and Strategic was surprised the trustee went the other way.

Investors agreed to a moratorium in December 2008, when Strategic’s loan book was valued at $477 million. At the time, investors expected 100% of investor principal plus interest would be repaid in due course but by December 2009 the value of the loan book had declined to $220 million.

In January, Review Events were triggered because the value of the loan book was less than 75% of Strategic Finance’s liabilities and it missed a repayment under the moratorium.

Perpetual said the review had taken longer than it would have liked but it was important to establish whether a restructuring or sale would have been better for investors.

Both Perpetual and the receivers would be in contact with investors in the next few weeks with an expected timetable and advice on how much money would be realised.

Mr Fisk said in a statement the receivership would provide more certainty. "It is too early to release any further details, but we are working as quickly as we can to determine the best option going forward to ensure maximised funds are distributed to investors.


“The receivership also brings certainty to some $5.2 million of unsecured creditors’ claims that were not subject to the moratorium and provides options to review cost structures that were not available to management under the moratorium.

“We will provide a report to investors as soon as we possibly can. However, in the meantime we’ve set up a dedicated help line and web page to allow investors to ask questions and find out more information."

The phone line for investor information is: 09 355 8030.