Hubbard's plan to pay back Aorangi investors

Allan Hubbard Photo / The Listener

Embattled Timaru businessman Allan Hubbard will pump assets worth as much as $60 million into Aorangi Securities Ltd in a bid to return investors' cash to them, say company's statutory managers.

Some 400 investors owed $96 million are expected to receive between
$87 million and $97 million over the next three to four years, according to the latest report by Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton.

The managers expect to make a payment of 10 cents in the dollar by the end of June.

The report outlines a three part process to allow Hubbard to make good Aorangi investor losses.

The key element is that "Mr and Mrs Hubbard's interests in various assets are to be transferred to Aorangi for the benefit of investors."

"These assets have a recorded value in the region of $50 million to $60 million, and are already included in the Aorangi portfolio."

The statutory managers are also considering carving out a separate entity to hold Aorangi's dairy farm interests, into which investors
may be able to switch their interests.

The report says repayments on Aorangi loans were still late, with only a third of interest due in the December quarter being paid.

That's left total interest in arrears at $3.9 million, with only a third of borrowers related to Hubbard meeting their obligations.

"This recovery will be subject to costs relating to the management and realisation of the portfolio," the report said.

"Based on these estimates, investors could suffer a loss, and Hubbard would receive no money from Aorangi."

Hubbard's interests were frozen by Commerce Minister Simon Power in June last year after an anonymous complaint was made to the Securities Commission by an investor claiming they had never been shown a prospectus.

Aorangi is the subject of a Serious Fraud Office investigation, and the white-collar crime investigator expects to make a decision
on whether to pursue prosecution in the next few weeks.

Te Tua Charitable Trust's position improved from the last report in November, and the managers expect to recover $8.7 million from its loan book, up from the previous estimate of $5.9 million.

Yesterday, the managers said investors in Hubbard Funds Management, another of Hubbard's frozen vehicles, face "considerable"
losses and won't receive any form of distribution until next year.

The next report is due at the end of June.