Perpetual Trust weighing up Strategic Finance’s future
Perpetual Trust holds the fate of Strategic Finance in its hands after receiving the beleaguered finance company’s best option on Friday.
Tuesday, March 2nd 2010, 10:14PM 
6 Comments
Head of corporate trust Matthew Lancaster told depositrates.co.nz that they had received Strategic's best option, and were now weighing it up against alternative routes that were already on the table, including receivership.
"It will probably be towards the end of next week (when a final decision is made) - there's quite a lot of detail in the proposal put forward which we need to review," Lancaster said.
The proposal is believed to be along the lines of a Hanover-style debt-for-equity swap with some element of a cash payment, though no-one's willing to divulge too many details.
Strategic yesterday announced a worse-than-expected loss of $99.8 million for the six months ended Dec. 31 after increased its provisions for bad debt to $107 million and raised write-offs to $15 million. It had earlier warned the loss would be about $86 million for the period, sparking a second review event with trustee Perpetual after its provisioning for bad loans pushed its total loan book value against aggregate principal monies owed beyond the required 75% ratio.
The finance company had caused a first review event after it missed the first payment to investors, though it was successful in paying off its $25 million facility with Bank of Scotland.
Chief executive Kerry Finnigan blamed the moratorium timetable for the missed payment, saying the company's debtors tried to use the looming deadline to bargain down their own repayments.
Strategic froze repayments to some 15,000 investors in 2008, going into moratorium in December of that year, when it promised to repay some $325 million over a five-year period.
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Comments from our readers
Half the problem todate has been the lack of ability and common sense of Trustees to make a decisive decission.
Do it, be big and brave and get a receiver in there NOW!
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Put them into Receivership and get these guys off the "Gravy Train" which is costing us investors Hundreds of Thousands of Dollars.
Come on Perpetual Trust let us Investors get at least something out of this Company's Gross Mismanagement of our money.