Bridgecorp funding halted after developer collapses

An Australian regulator has put the brakes on fundraising by a prominent New Zealand investor embroiled in that country's largest property collapse.

The Australian Securities and Investments Commission (ASIC) has put an interim stop order on a fundraising offer from Rod Petricevic's Bridgecorp due to its exposure to a company connected to collapsed property developer Westpoint Corp.

Westpoint's A$450 million ($507.8 million) downfall has exposed banks, mezzanine financiers, about 7000 retail investors and dozens of financial planners to its failure.

Included in the fallout are two New Zealand-based funders: Hanover (the Mark Hotchin and Eric Watson-owned investment vehicle) and Bridgecorp - jointly funding a Westpoint development in Melbourne.

Petricevic confirmed yesterday his company and Hanover were involved in funding the Port Melbourne shopping and apartment development.

But he said this would be one of the only Westpoint developments that would be finished.

The Perth-based specialist apartment developer, with projects spread across Sydney, Melbourne, Brisbane and Perth, got funding from banks and mezzanine financiers such as Hanover and Bridgecorp.

But Australia's residential property slowdown hit the developer hard - apartment sales slowed and the company collapsed, taking down many investors and funders.

ASIC has just issued an interim stop order banning Bridgecorp from trying to raise money and criticised the funder for failing to disclose its full exposure to Westpoint.

But Petricevic said losses on the Melbourne project would be minimal.

"We believe we might not get our interest and fees back but we don't believe there will be a loss of capital," he said.

Bridgecorp was trying to raise A$238 million before ASIC froze the offer. Bridgecorp had promised not to lend any more than $20 million to any one borrower but a supplementary prospectus showed it had A$34 million exposure to Westpoint's A$140 million Bayshore project in Port Melbourne. Eighteen shops and 304 apartments are being built there.

As a secured creditor on the project, Bridgecorp Finance appointed receiver KordaMentha. Petricevic said the receiver had appointed a committee which allowed work to continue.