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Strategic Finance's 13,000 investors will get some of their money back, chairman Denis Thom predicts. But he can't say how much.
"I certainly think there's money for investors. I would not speculate on how much but we informed our investors during the moratorium how things were going. We were getting loans repaid, certainly," said Thom of the period December 2008-March 12 when the funder had frozen returns but was trying to pull in money.
Thom of Wellington, a professional director for 18 years, said the Strategic failure had been one of the most difficult aspects of his business career.
Strategic, owing $417 million, is New Zealand's second-largest finance company receivership after Bridgecorp collapsed in July 2007 owing 18,000 investors $458.7 million. The Princes Wharf-headquartered Strategic failed to meet the terms of its debt scheme so Perpetual Trustee appointed PricewaterhouseCoopers receivers, a move Thom said the Strategic board opposed.
Louise Edwards of Perpetual is making no predictions. "It is too early to give an indication about the level of recovery. The receivers will be making a full report within the next couple of weeks," she said.
On Friday, PWC announced there was no money for Strategic's preference shareholders. It applied to NZX to have Strategic's shares delisted.
Thom asked for understanding of Strategic's management and board.
"I can't stress how hard the last two years have been. All the directors and management have really... we did our very, very best. We didn't agree with the receivership decision but that was the right the trustee had. You would be aware we were working around the clock during the moratorium to recover funds and it was extremely difficult because of the global financial collapse and the property market," Thom said.
Strategic had about $220 million outstanding loans at the time of receivership and Thom condemned the mainly-New Zealand developers who defaulted on repayments.
Asked whether he blamed Neville Mahon's Fiji Beach Resort & Spa Managed by Hilton, Layne Kells' Soho Square in Ponsonby or Rick Martin's Sentinel apartment tower at Takapuna, Thom refused to be drawn.
"I don't want to comment on individuals. Those issues have to be addressed by the receivers," he said.
PWC's John Fisk has described Strategic's loan book as extremely complex and predicted the job would be difficult.
Thom backed the board's decision to pay ex-chief executive Kerry Finnigan $550,000 annual salary even when Strategic was struggling.
"We believed it was appropriate. He was a very good CEO and he was working seven days a week, 24-hours-a-day. Kerry was the leader. The brunt of it all was on him. We took the moratorium very seriously. We did everything we could to get the money in," Thom said.
But investors like Rowland Crone of the Kapiti Coast said Strategic did not disclose the extremely high-risk nature of its business, say specifically who it was lending money to or take enough care with many retirees' life savings. Thom rejected this, saying all Strategic's accounts were audited and the business was transparent and had excellent corporate governance.
The 2009 accounts declaring 12 employees paid more than $100,000 were out-of-date by the time of receivership when the company had hardly any staff left, Thom said.
Triumph Capital, directed by Strategic consultant Brian Fitzgerald and an executive director Marc Lindale, was involved in opening Hilton Lake Taupo last year in a deal separate from Strategic, Thom said.
"Triumph has got nothing to do with Strategic," he said, even though Strategic declared Triumph as a related party. "There are common directors but that doesn't make it a related party. My recollection is that there's no Strategic money in the Hilton development at Lake Taupo," Thom said.
"I want the Strategic investors to get back as much money as possible. That's the reason we went into moratorium, to achieve that," he said.
"My heart goes out to investors. If I could wave a magic wand, I would. This has been a highly stressful time," Thom said.
DENIS THOM
* Chairman, Strategic Finance (in receivership)
* Director Strategic Mortgages (in receivership)
* Director Lumley General Insurance (NZ)
* Director Kirkcaldie & Stains
* Ex-chairman real estate syndicator Urbus
