Hubbard investors may only get 60pc return

A march in support of Allan Hubbard and his wife Jean proceeded through Timaru's main street in June. Photo / Sarah Ivey

Statutory Managers for Hubbard Management Funds (HMF) and Aorangi Securities say that investors face significant losses on their investments and that the quality of the financial reporting by Allan Hubbard "is of serious concern to us".

Hubbard and South Canterbury Finance are being investigated by the Serious Fraud Office.

Statutory Managers from Grant Thornton, Richard Simpson, Trevor Thornton and Graeme McGlinn, made the comments as they issued their fourth report into the affairs of HFM and Aorangi.

"Investors in Hubbard Management Funds (HMF) could receive only 60 per cent of what was on their March 2010 statements and it could be well into next year before they will see any returns," they said in a news release issued with the report.

As for Aorangi, the statutory managers said total loan and investment arreears are now estimated at NZ$3 million. They said they were working with Hubbard on the disposal of some Aorangi assets and trying to "rectify" loans that weren't meeting their obligations.

"From the approximately 50 loans and farm investments, we hope to realise NZ$20 million by the middle of 2011. This will include refinancing a number of loans and selling properties where Mr and Mrs Hubbard are the sole owners."

"We will also be working with farmers who have been unable to meet their interest obligations to Aorangi and who may, in fact, never be able to do so."

Meanwhile, the state of Te Tua Trust's loan records was "very poor." Of Aorangi's NZ$24 million investment in Te Tua, a "worst case" estimate was that just NZ$6.88 million was recoverable. The report also highlights the transfer to Te Tua from Presbyterian Support Services SC Inc, at face value, NZ $2.7 million worth of debentures held in failed finance companies.

They said they were negotiating with the tenant in a property owned by Te Tua, where no rent has been received for 12 years, over the arrears and the future lease of the property.

"We have been advised that the roof on this property may now need a full replacement."

Of a total of 104 Te Tua loans, 25 are not being paid, they have no address or contact details for nine further borrowers and 11 loans are likely to be written off.

The face value of Aorangi's assets is NZ$130 million, suggesting significant headroom compared to the NZ$96 million owed to investors. However, the statutory managers say they have "serious concerns" about the recoverability of the assets.

They also note that in March this year Hubbard transferred a number of his equity interests to charitable trusts.

"We have investigated this arrangement and have concluded that these transfers are of doubtful validity. A number of shareholders in these companies have taken action to reverse these transfers, as they required the consent of all shareholders. A formal annulment process is under way and all shareholders of each company will be contacted with regard to the annulment."

- INTEREST.CO.NZ