KEY POINTS:
More than $1.7 billion of investors' money is now locked into moratorium repayment schemes after Strategic Finance became the latest to join the list.
Strategic yesterday announced it had approval from its 15,000 stockholders to proceed with a five year wind-down of the company after meetings
in Wellington.
Like many of the moratorium proposals that have been put to investors in the past few weeks, the outcome of the vote was already decided before the 50 or so stockholders turned out to have their say.
Strategic Finance chief executive Kerry Finnigan said he knew the result beforehand and had expected only a meagre turnout as the company had already hosted a roadshow around the country.
The company will be wound down under the supervision of PricewaterhouseCoopers.
It is not yet known how soon debenture holders will receive their first payment.
In its proposal, Strategic said it planned to make quarterly payments to investors starting from September 2009. But it must pay $25 million to lender Bank of Scotland International (BOS) first before debenture holders can be paid back any of their money.
BOS is also owed a further $78 million that ranks at the same level as debenture holders.
Yesterday Finnigan remained confident investors would get back all of their money.
"Our aim is to ensure everyone is fully repaid their principal and interest." But he admitted it would be tough.
"We are in uncertain times and there will be things that could occur that are outside of our control. The concern is that will be negative. But our forecast today is that it is
achievable."
Under the proposal, Strategic will continue to lend money but will be restricted to lending on existing projects to help to ensure they are finished and that money can be repaid to investors.
Finnigan said it would keep investors updated every quarter on the progress of its loans and repayment to investors.
Strategic's business itself would also be under a cost-cutting review.
"There has been a fair degree of cost review already undertaken and it will be continually reviewed. We just need to resource the business appropriately."
Before the proposal was put together, the business had close to 50 staff - it had already reduced that to 22, Finnigan said.
The Christchurch office had closed and the firm was close to closing its Australian office while office space in Auckland would be sublet and a lease on the Wellington office would be reviewed when it came up for renewal in 2009.
Kapiti Coast sharebroker Chris Lee said the Strategic plan had been one of the least controversial and he was not surprised that it had passed almost unanimously.
Lee said it was the last moratorium vote in what had been a very tough year for investors.
He expected that would mean there would be little or no further drama to come in the finance company sector for the next one to two years. It was in the third year that he expected more trouble to come as the payouts increased.
But Lee said he believed Strategic would have the best chance of all moratoriums of paying investors back. Many others who had invested in Dominion Finance, Bridgecorp and Capital + Merchant would be lucky to see any money back, he said
Strategic Finance froze payments to investors in August. It decided to pursue a moratorium after a management-led consortium move to buy the business from troubled investment company Allco HIT fell through in October.
IN MORATORIUM
* Strategic Finance: $325m owed to investors.
* Hanover Finance and United Finance: $527m.
* Dorchester Finance: $168m.
* North South Finance: $102m.
* St Laurence: $250m.
* OPI Pacific Finance: $313m.
* Boston Finance: $38.5m.
* Beneficial Finance: $24.2m.
