KEY POINTS:
Secured debenture holders in failed finance company Capital + Merchant Finance may recover up to 59 per cent of their investment over time, receivers say.
C+M Finance, with Capital + Merchant Investments, was placed in receivership in November, owing $190 million to 7000 investors.
In their first report on the companies' state of affairs, receivers Richard Simpson and Tim Downes of Grant Thornton said the main assets were loans and advances totalling $182.6 million.
Realisations from the assets depended on certain events occurring, but it was clear there would not be a full recovery to secured debenture holders, the receivers said yesterday.
Most of the loans were for property development projects in various stages of completion. Interest was accruing and capitalising on most of the loan balances.
The combined C+M Finance and C+M Investments loan portfolios had a total concentration of 35 per cent, $90 million, relating to interests of two borrowers, the receivers said.
One of those accounted for 19 per cent, $48.4 million, and the other 16 per cent, $41.2 million.
Grant Thornton's report said each loan was being individually analysed to find the best way to maximise realisations. They could not give details of individual loans. An insurance policy was in place for unrecovered principle in the case of 42 of 55 loans. It had not yet been confirmed whether there was effective cover in place and specialist advice was being taken.
Providing some background to the receivership, the report said it had arisen after re-investments fell to 10 to 20 per cent, compared with 50 per cent a year previously, after the failure of some other finance companies.
Unsuccessful attempts had also been made to sell some properties for which C+M held securities. Prospects of selling at required values on the open market had diminished, forcing short to medium term cash problems.
After Grant Thornton's appointment, the receivers had been refused entry to the premises and C+M Finance directors had sought an injunction to restrain the receivers from taking further steps until a court order was obtained.
That happened on November 29, and in his judgment Justice Harrison had commented that on a realistic assessment of its financial position, C+M Finance should not have been receiving any public money in recent months, the receivers' report said.
- NZPA
