Anne Gibson

Property editor of the NZ Herald

Strategic investors in line for payout

The $250 million Soho square development, one of the projects Strategic Finance lent money to. Photo / NZ Herald
The $250 million Soho square development, one of the projects Strategic Finance lent money to. Photo / NZ Herald

About 13,000 investors owed around $400 million in one of the country's largest finance company collapses will get a small payout next month.

John Fisk, Strategic Finance receiver, has just issued an update on the business, saying he hopes to make a distribution as soon as he gets money from property sales.

"Based on the number of properties under contract and subject to those sales settling, we expect that a further distribution is likely to be made in April," he told investors.

So far, secured debenture holders have received 7c in the dollar, equating to $26 million.

Many investors were elderly people, whose life savings were lost in the collapse of the Princes Wharf-based businesses headed by rugby legend Jock Hobbs, alongside Marc Lindale and Kerry Finnigan. Strategic ceased trading in March 2010.

Since then, about $94 million had been recovered from borrowers who got money from various Strategic entities, Fisk indicated.

But only $32 million went directly to Strategic "with the balance being paid to prior ranking security holders and to cover direct sale costs".

The level of recovery was lower in the past four months "due to the Christmas period".

Property in Fiji was sold, with funds payable over a period.

"In this case Strategic did not hold a first ranking mortgage and did not have control of the sales process. The amount payable to Strategic provides a better outcome than if Strategic had not agreed to the sale," Fisk said.

Strategic money helped to fund Neville Mahon's Fiji Beach Resort & Spa managed by Hilton.

The financier was behind several Pacific properties, including three Rarotonga resorts.

"Two resorts in Rarotonga are now subject to unconditional contracts and we are awaiting the necessary regulatory approvals so these sales can settle. We estimate that settlement will occur in April," Fisk said in the latest update.

Fisk predicted investors would get 12 per cent to 26 per cent of their outstanding principal back.

The Financial Markets Authority indicated late last year that it would announce what action, if any, it might take against those behind Strategic.

Options ranged from laying charges - as with Hanover, South Canterbury Finance and others - or ceasing its involvement without any action.

Fisk said PwC had co-operated in full with the FMA over Strategic.

"We had interviews with the FMA and provided them with documents they requested," he said.

An FMA spokesman said this week that the Strategic probe was not completed.

- NZ Herald

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