KEY POINTS:
Leading investment analyst and Herald columnist Brian Gaynor is hopeful the 18,000 investors in finance company Bridgecorp will eventually get most of their money back.
Specialist property financier Bridgecorp was placed in receivership yesterday after defaulting on repayments of some term investments due to investors.
Receiver John Waller,
of PriceWaterhouseCoopers, said a preliminary analysis showed about $500 million was owed, of which about $470m was secured against various loans made by Bridgecorp.
He said it was far too early to have any view on how much money would be returned to investors.
Investment analyst Brian Gaynor also said it was hard at this stage to predict how much investors would get back.
He expected it to be "a reasonable percentage, if not a very high percentage".
But selling properties could take time and the process might take a few years, he said.
Only 30 per cent of Bridgecorp's loans were secured against first mortgages, with 52 per cent secured against second mortgages and 18 per cent against third, fourth and fifth mortgages.
Unless the full price was received for some of those properties, even though the loans were secured, investors would not get all their money back, Mr Gaynor said.
Among factors that could affect the final amount returned to investors was that in the past nine months Bridgecorp had lent a substantial amount of money on just land, and land was often a little more difficult to sell than completed developments.
Also Bridgecorp now had 34 per cent of its money offshore, compared to 24 per cent nine months ago.
"We're just not sure as to how secure the money offshore is compared to the money that might have been lent by Bridgecorp in New Zealand," he said.
Bridgecorp in this country, which had borrowed money from the New Zealand public, had lent $46m, as at the end of December, to its parent company in Australia.
Mr Gaynor was not certain what happened to Bridgecorp money once it left this country, but it appeared that some money lent to Australia had then been lent on to Fiji.
Bridgecorp group was linked to Fijian-registered company Matapo, which has been building a resort and homes near Nadi.
The development has been disrupted by December's Fijian coup, and Bridgecorp said it was owed $49.1m relating to the development.
Mr Gaynor said the receivers would be looking at ways of realising individual assets, in the hope of getting close to 100 per cent.
Of the money in this country, he expected investors would get 90 per cent back, but he did not really know what had happened to the money that went to the parent company in Australia, and maybe even to Fiji.
"There are some excellent finance companies out there, but Bridgecorp has always been known to be a very, very high risk company," Mr Gaynor said.
That could be seen from the share price of Bridgecorp's parent company Australian-registered Bridgecorp Holdings Ltd on Unlisted, where they had been trading for 10c or 15c this year against asset backing of $1.27.
"So, sharemarket investors have looked at Bridgecorp and have stayed away from it. Yet the irony is that lenders have lent a huge amount of money to it," he said.
"Bridgecorp is an exception, it's not the rule. The finance company sector is generally in a good state."
Investors needed to look at a finance company's risk, he said.
The average rate Bridgecorp paid investors was only 9.5 per cent. Those same investors could have put their money into Rabobank, a major international bank with the highest credit rating, and got 8.2 per cent, Mr Gaynor said.
The extra 1.3 per cent was certainly not worth the risk, he argued.
Bridgecorp's parent company and finance subsidiary in Australia were not in receivership.
The receivership of Bridgecorp, whose managing director is Rod Petricevic, follows last year's failure of finance companies National Finance 2000, Provincial Finance and Western Bay Finance.
- NZPA