KEY POINTS:
More than a year after announcing the wind-up of its First Step investment funds, investment advisers Money Managers have told over 7000 investors they are unlikely to get all of their money back.
The firm told investors it was going to close down the six trusts which come
under the First Step umbrella in October last year because more investors were leaving the trusts than joining them.
It froze the $457 million invested and told investors it would pay them out over a two-year period while it liquidated assets.
So far it has paid out $186.5 million but this week investors got a letter from the trustee company Calibre Asset Services, along with the annual reports, stating that $38 million had been "written into the accounts" and it was "unlikely that this amount will be available for return to the trust and therefore to investors".
The annual reports also reveal that a further $108 million is under "fundamental uncertainty".
Calibre Asset Services states in its report that some assets can and have been sold but others require a "patient sales and realisation process".
"In some cases, assets were going concerns in their own right, and accordingly these assets have to be wound down over time. It is not just a simple sale process," it states.
"Over the last six months, conditions in the credit markets have become very challenging both internationally and within New Zealand. Unfortunately these conditions have made the task of realising assets of the trusts more difficult."
An accompanying letter from Money Managers states that the $38 million is to cover instances where the full value of some assets are unlikely to be realised and states that not all trusts will be affected.
"This is certainly not the news any one of us was wanting, but it is important to understand the effect of these provisions will be different for every investor. Most investors will have already received back significant payments of their capital from the trusts since closure."
Three of the trusts have paid out more than 50 per cent of the money invested in them but one has paid less than 4 per cent.
A further payout of $25 million has been scheduled for February next year.
The trusts loaned money to a variety of ventures including used-car loan company Club Finance, which announced it would be winding down last month because it has been unable to secure funding lines.
It owes $63 million to the trusts.