Reaction to Bridgecorp collapse
St Laurence says it has no involvement, Common collapse questions, Ranking system questioned.
Wednesday, July 4th 2007, 5:16AM
We're not involved: St Laurence
St Laurence is reminding the market that it was not a shareholder in Bridgecorp when that company fell over this week.
St Laurence managing director Kevin Podmore said that St Laurence has only had a lending relationship with Bridgecorp. St Laurence had previously made an advance to Bridgecorp in late December 2006, using Bridgecorp's stake in Dorchester Pacific as security. That loan was fully repaid to St Laurence Limited in April.
"All lending activity has been at normal commercial terms with very solid levels of security that meet our strict lending criteria."
Podmore says St Laurence is in a strong position, as disclosed in its annual results for 12 months ending March 31. It had more than $53.8 million in cash at balance date, trust deed ratios for our investors implemented in 2006 that lead the industry, and diversified income streams from our funds management acquisitions in 2006.
Common collapse questions
Bridgecorp's receivers, PricewaterhouseCoopers have put up a FAQ about the failed company.
Some of the most common questions in relation to Bridgecorp are answered here http://www.pwc.com/nz/bridgecorp/BridgecorpFinanceLimitedFAQ.pdf
Ranking system questioned
Depositrates.co.nz readers with money invested in Bridgecorp are clearly angry about the collapse.
One of the recurring comments made in emails to the site are around ratings. Many appear to have used the SPQ ranking system to help them make a decision.
This system, which has little industry support, originally gave Bridgecorp an AAA ranking however that has fallen to BAA - which is still very strong.
Here is what some readers say:
Hi Phil,
I like your comment about "how good are the ratings agencies?" in respect to Bridgecorp's recent debenture offerings.
I've often wondered myself at the methodology behind interest.co.nz's SQP scoring and how a company with (what I thought were) glaringly obvious warning signals on the fundamentals of the balance sheet, could still be worthy of an AAA rating. I drew my own conclusion that interest.co.nz place a great weighting in determining a company's final score commensurate with the level of advertising that a company places on their website.
Hi
We, my wife and I invested with Bridgecorp based on the AAA rating given it would appear that these so called ratings and the so called experts who present them are as worthless as used toilet paper.
So where to from here for the mum and dad investor? I suggest the local sooth sayer; she would be just as accurate! I am also from Invercargill where we received equally bad advice from local financial advisers on Provincial.
Hello
I am one unhappy investor with Bridgecorp. As you state: "Remember one ranker gave Bridgecorp an AAA not that long ago".
Given these rankings being given out showing a seemingly good rating how does one know what to trust. Who to trust? What does the term secured debentures really mean. I understand with this event there is no guarantee one will get funds back.
I now no longer have any faith in finance companies. One finance company Geneva has a Standard and Poor's rating . Can we have any faith in this company?
Hi
The rating website, Interest. co.nz should shut itself down.
After its good rating on Provincial showed up its flaws in its process it had Bridgecorp at BAA , almost a perfect rating.
Obviously a lot of investors look at this site for guidance but now after two disastrous ratings it should have a good look at its usefulness.
Hi,
Was glad that I cashed up my Bridgecorp Investment for $12500 in May and had the sense not to roll it over! Was pleased to be paid out in full but I always thought it was not a good risk to reinvest in.
Hello
As an investor of a large chunk of our life's savings it was rather ironic that in this mornings mail there is a newsletter from Bridgecorp letting investors know how well they are going and assuring us that their three and a half PIR star rating is a good investment grade. Sick joke.
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