North South investors may recover up to another 8.5c in the dollar
[Updated] North South Finance's debenture holders could get up to a further 8.5 cents in the dollar of their capital back, its receivers at KordaMentha say.
Thursday, September 8th 2011, 12:28PM
In their six-monthly report filed at the Companies Office yesterday, the receivers Grant Graham and Brendon Gibson said: "In addition to the $31 million still owing to investors, two banks holding security stock are owed a total of $15 million."
GoodReturns had assumed the banks ranked ahead of the debenture holders but in fact they rank equally, KordaMentha says.
Investors have already received 61.5 cents in the dollar back in three distributions (yesterday's report rounded this amount to 62 cents), the last in January this year, and their total return should ultimately be between 65 cents and 70 cents in the dollar, the accounting firm says.
Yesterday's report said there are seven remaining loans totaling $14.6 million on the company's books, one of which is being serviced and the other six have some form of recovery action being taken.
A letter sent to investors in August had talked about five remaining loans, none of which were being serviced. KordaMentha says since then it has recovered some funds on two previously written off loans and another borrower has resumed paying interest.
The letter said the remaining loans were "the most problematic exposures with collateral that cannot be realised easily or quickly."
KordaMentha estimates about 70% of the remaining likely recoveries (from five of the properties) relate to coastal property in the North Island.
"Historically, sales of this type of property are only achieved during the summer months. We will again ensure these properties are aggressively marketed over summer to try to generate funds to enable us to pay a further distribution to investors," it says.
It doesn't expect to be able to make a further distribution until some time in the first half of 2012.
North South, which was owned by Dominion Finance, went into moratorium in late 2008 and then into receivership in July 2010 after the now defunct Securities Commission laid civil and criminal charges against the directors.
The directors,Vance Arkinstall, Rick Bettle, Terry and Ann Butler, Paul Forsyth and Robert Barry Whale, have pleaded not guilty. The criminal charges, being pursued by the commission's successor, the Financial Markets Authority, carry a maximum five-year jail term or a fine of up to $300,000.
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