KEY POINTS:
A finance company chaired by former finance minister Ruth Richardson has hit difficulties.
It is the second finance company chaired by a former senior National Party Cabinet minister to strike problems this year.
Richardson is chairwoman of the $16.5 million IMP Diversified Income Fund which is seeking a moratorium on repayments of interest and capital to investors.
IMP's difficulties come a month after Lombard Finance and Investments, whose chairman was Richardson's former Cabinet colleague Sir Douglas Graham, was placed in receivership.
In letter sent to investors yesterday, IMP, which is owned by Auckland venture capital firm I-Cap, said it had considered issues such as "the weakening economy, the pronounced investor switch away from debentures, and the likely ability of IMP's investee companies to repay on time".
Richardson, finance minister from 1990 to 1993, told the Business Herald yesterday that IMP's investments consisted of mezzanine debt positions in a range of technology, biotechnology and healthcare businesses seeking to become export based.
One of its investments was ICP Bio which was placed in receivership two weeks ago.
However, Richardson said IMP's board had been aware of a potential mismatch between the scheduled repayment from the companies it invested in and the rollover of debenture stock for some time.
It was currently up to date on interest and principal repayments but had decided, with the co-operation of its trustee, to take the "proactive and prudent" move of attempting to secure a moratorium.
Under the proposal, which is to be voted on by debenture holders on June 18, IMP would conduct "an orderly realisation of its loans and investments" in order to repay all debenture stockholders by November 2010.
"IMP's board believes that debenture stockholders should be repaid all of their principal and interest at a rate of 9.5 per cent over this period."
IMP has now suspended payments of interest and principal pending the outcome of next month's vote.
