Receiver mulls sale of entire Strategic Finance loan book

Strategic Finance's receiver is considering selling the entire loan book of the failed business which owes investors $417 million.

John Fisk, receiver of New Zealand's second-biggest finance collapse after Bridgecorp, said he had received expressions of interest from businesses seeking to buy all the loans.

This might give the best outcome for everyone, he said, although no decisions have been taken.

"It's an option certainly worth exploring," Fisk said this week.

Strategic, once headed by NZ Rugby Union chairman Jock Hobbs who is an investor, owes 13,000 people $417 million. It is the second biggest finance company collapse after Bridgecorp which owes $459 million.

Strategic failed to meet the terms of its debt scheme so Perpetual Trustee appointed PricewaterhouseCoopers receivers on March 12.

Fisk said no deal had been done. He was only at the initial phase and about a fortnight away from writing to investors.

But a major new development had arisen and he was examining the sale option.

"We have some interest in the whole book," he said, adding that this was not like Allied Farmers' takeover of the Hanover loan book.

"It could be a sale process. We have a number of parties who have expressed an interest - five or six businesses. They are not developers but they would be people who buy loan books," Fisk said.

He said it was still too early to tell what payments investors might get.

The process of attempting to recover individual loans for properties where development has either not started or is only at the initial stage could be a less attractive option, he said.

This is mainly because Strategic is often in a subordinated and therefore less powerful position on many loans.

"Anyone who wants to buy the book would be wanting to make a profit. So we have to balance that against the cost of dozens of loans. The loans are large and you are dealing with property developments either in progress or which have not started yet. So it's not a straightforward job and also you're dealing with prior charge holders which is not a good place to be," Fisk said.

The statutory time frame for PWC to issue its initial report is two months, meaning the initial report is due on May 23, then the next November 19.

"We will be doing a letter to investors by the end of this month. The sale process could take a few months," Fisk said.

Denis Thom, Strategic chairman, last month predicted investors would get money back.

"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," Thom said.