KEY POINTS:
Hanover Finance has gone on the attack, taking action against the developer of a $2 billion Queenstown project over a $70 million loan in default.
Hanover yesterday announced it had appointed a receiver to recover the loan on the Five Mile project at Frankton.
The action is the
latest in a string of attempts to recover bad debts afterHanover struck problems with loans for the Kinloch golf resort and an Auckland apartment block.
The finance company holds more than $1 billion of investors' money. Yesterday it announced it had sold the Kinloch resort.
Five Mile developer Dave Henderson yesterday lashed out at Hanover over funding to develop the exclusive Queenstown project, accusing the financier of acting against him.
Henderson, managing director of Christchurch-based Property Ventures, vowed to begin legal proceedings with a court injunction to challenge the receivership.
He said he had been working with the financier to reduce his loan until he learned of a sudden change.
Hanover sold the loan to another financier - NZ Castle - although Hanover was still managing it, he said.
Henderson said Hanover had acted without agreement to sell his loan to NZ Castle, owned by Auckland financier Martin Reesby and Fortress.
Hanover had sold the loan before its June 30 balance date, he said.
The developer said he had been working with Hanover to restructure the loan and meet the financier's needs. He disputed Hanover's claims about payment defaults.
"There's been a whole bunch of arguments in the last eight months, with reassurances from Hanover that they would provide us with additional funds. Whether we defaulted is debatable because of the arrangements between the parties," Henderson said.
Henderson said his Five Mile development was going through a plan change hearing.
"This causes us a whole bunch of problems we don't need right now and it's entirely improper," Henderson said.
Reesby said any issues over the loan were being handled by Hanover which was managing it.
Although he did have an involvement in the loan, he said he preferred not to say what that was.
"It will all come out in due course but the answer is that Hanover are managing the loan and we have no day-to-day involvement.
"All the action that's occurring is by Hanover but not by us," Reesby said.
Hanover said defaults arose on the Five Mile loan several months ago and it had been working with the borrower to determine a suitable way forward.
Other third-party creditors had started legal action against Five Mile Holdings and enforcement action was being taken against Property Ventures companies so Hanover decided it was in the best interests of investors and stakeholders to exercise its rights as a secured creditor, the financier said.
Last month, Smith Crane and Construction - the South Island's largest crane company - said it was taking court action against Property Ventures over work done at Five Mile.
Five mile
* Ambitious project at Frankton, near Queenstown.
* High-density town for 10,000 people.
* Expected to be worth $2 billion.
In the firing line
Dave Henderson
Managing director of Christchurch-based Property Ventures. Hanover has appointed a receiver to recover a $70 million loan on the Five Mile project near Queenstown. Henderson has vowed to begin legal proceedings with a court injunction to challenge the receivership.
Andrew Krukziener
Auckland property developer who the Court of Appeal has ordered to repay a $4 million loan. The loan relates to an agreement Krukziener reached with Hanover - then called Elders Finance - in 2002 over a debt his companies could not repay.
Lily Zhong
Auckland apartment developer. The High Court last month ruled her company Winsun Developments must repay Hanover about $5 million after last year calling a mortgagee apartment sale on the block she developed.
