KEY POINTS:
As 18,000 investors in failed property finance company Bridgecorp await word from receivers on how much of their money they will get back, the company's Australian branch, which has been propped up with their money, continues to trade.
Bridgecorp, New Zealand's seventh largest finance company with about $600 million in assets, was placed in receivership on Monday after failing to make repayments to investors.
Bridgecorp and its New Zealand subsidiaries owe about $470 million in debenture stock and about $30 million in unsecured notes to investors in New Zealand and Australia.
But Bridgecorp's Australian division, Bridgecorp Finance, is still in business.
A spokesman for the Australian Securities and Investment Commission (ASIC) said the New Zealand receivership had been noted and the trustee for the Australian subsidiary was "considering any implications".
He said the commission understood Bridgecorp Finance had about A$24 million of debentures on issue, and was talking to the trustee.
In August last year, the Business Herald reported that ASIC had obtained court orders restricting Bridgecorp from raising further money in Australia through an unsecured notes offering.
It also required Bridgecorp to repay existing noteholders as their investments matured and have its loan book reviewed by an independent expert.
Money was transferred from New Zealand to repay those investors.
At the time, Bridgecorp's New Zealand operation had supported its Australian branch to the tune of A$52.1 million including an A$28.6 million purchase of loans secured over Australian property.
The company said it did not expect further significant support would be required, but it reserved the right to give it as long as the transactions did not breach the conditions of its trust deed.
The ban on raising money remains in force in Australia.
The New Zealand subsidiary's support of its parent was spelled out in an amendment to the company's prospectus last year, but that prospectus contained only the local subsidiary's financial accounts. Its Australian parent was in a worse state.
At the time the New Zealand company had $81.9 million in shareholders' money supporting liabilities of $474.2 million, but the parent company had only A$44.1 million in equity supporting A$616.8 million in liabilities.
Meanwhile, Bridgecorp's receiver, John Waller of PricewaterhouseCoopers, yesterday said mortgage trust Compass Capital (which has links with Bridgecorp) was also still trading.
Compass Capital was set up a year ago and is fully owned by the New Zealand Guardian Trust Company, which in turn acts as a trustee for Compass Capital Trust.
The beneficiary of Compass Capital Trust is Bridgecorp.
Compass Capital sought money from the public to buy high-quality mortgages from Bridgecorp and is believed to hold about $18 million worth.
Waller said Compass Capital's future was an issue for its trustee and directors which include Bridgecorp Holdings' finance director Robert Roest.
Despite suggestions yesterday that Bridgecorp investors could expect to get most of their money back, Waller was unwilling to give any guidance.
"I would not like to comment on that until we've had a proper look at the books," he said.
