First Step investment trusts wind-down stall as buyers dry up
Investors waiting for another $233.5 million tied up in First Step investment trusts will probably have to wait a little longer as prospective buyers for the company's remaining assets dry up, putting "significant challenges in realising the remaining assets."
Wednesday, July 22nd 2009, 9:22PM
by Paul McBeth
Calibre Asset Services, the company's trustee, wrote to investors last week warning them "further write downs or losses" could occur as the likelihood of more loan defaults from borrowers increases. The trustee put the drop-off in interest down to "general economic conditions," with potential buyers "tending to look for fire sale prices."
"The market seems to be continuing to deteriorate," said Calibre chairman Edward Russell. "There are still future distributions to investors" the trustee expects to make, but it wants to make sure investors knew where they stand, he said.
The First Step investments were sold exclusively through financial advisory group Money Managers, which was taken over by a group including staff, franchise owners and NZ Funds Management last year, and a decision to wind down the trusts was made in October 2006.
The remaining loans mainly relate to a geothermal project in Taupo which stalled after the financing for a prospective buyer fell through, and a number of general property loans. The trust told investors the state of the property market has resulted in the "painfully slow pace" at which these assets are being realised.
Calibre told investors in January that nearly $60 million of "non-recoverable investment losses" had been accounted for in the 2008 financial year on top of a $38 million loss the year earlier.
Paul is a staff writer for Good Returns based in Wellington.
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