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Failed finance company Bridgecorp channelled much of the $500 million it owes investors into a few of New Zealand's biggest real estate gambles which could take many years to turn a profit, information obtained by the Business Herald shows.
Bridgecorp's millions have been loaned to some of the highest-risk property ventures, with the failed financier taking the most hazardous portion of the loan, often well behind other lenders in the event of a default.
Of the approximately 60 loans Bridgecorp has outstanding, some are for developments only partly finished.
Other schemes have failed and are being wound up, contributing to Bridgecorp's demise because the financier is owed at least $14 million from bust ventures in receivership or liquidation in Wellington and Napier.
This will be cold comfort to Bridgecorp's 18,000 investors hoping to get at least part of their investment back.
Former Australian cricket fast bowler Craig McDermott was yesterday revealed to be Bridgecorp Australia's single largest debtor, having borrowed from the group to fund his housing projects in Queensland.
McDermott has told Australian media he can repay the money to Bridgecorp Finance, to which receivers were appointed on July 3, He said last night his firm Maxen had a successful relationship with Bridgecorp.
Australian investors who attended a creditors' meeting this week were reported as saying they were surprised at the collapse because they had been completely unaware their debentures and unsecured notes with Bridgecorp were second mortgages, not first.
Bridgecorp took the most risky stance on many property loans because it was the second mortgagee, meaning others get paid first.
Inland Revenue and various trading banks are standing first in line to get any money from the property ventures, which relied partly on pre-sales to hopeful purchasers before work could begin.
Bridgecorp loaned money to more than 10 major real estate developments worth $1 billion-plus in New Zealand, Australia and Fiji.
Its investors are now depending on the skills of PricewaterhouseCoopers' team to extract money, but Colin McCloy, a PwC partner, said this week it would take "several weeks" before he or fellow partner and receiver John Waller could give any indication of how much money would be available for investors.
Ian Gladwell, of Compass Capital, this week listed $19 million of loans his entity had made on six projects, saying Bridgecorp had loaned money on the same projects but held positions behind Compass.
But Compass does not hold the first mortgage in every case.
It ranks behind other financiers, meaning Bridgecorp is sometimes holding the third and most subordinated mortgage loan position.
Money has been loaned on the Bendemeer Lodge and Villas project, a $140 million development at Lake Hayes near Queenstown. Sales have been slow at the 130ha scheme. Christchurch developer Richard Paynter has a share of this project.
Money has also been loaned for a large townhouse development at Te Atatu South, for a residential subdivision at Mangawhai north of Auckland, the Pacific Palms International Resort and Golf Club at Papamoa near Tauranga, a hotel project at Tutukaka by Gateway to Queensland and for eight townhouses in Auckland's Blockhouse Bay.
Bridgecorp has loaned money on two projects which have failed. It loaned $10 million for the development of Napier's Scenic Circle Hotel by Robert Brown Developments, a company which is now in receivership.
Bridgecorp also loaned money to Wellington's Advantage Construction and Consultancy which went under owing Bridgecorp $3.6 million.
Bridgecorp's highest-profile loans are to two overseas projects.
The first is a large Melbourne project by the collapsed Westpoint Corporation to build 18 shops and 304 apartments.
Hanover made a $2 million loss provision on this deal.
The second is Fiji's Momi Bay development, where Bridgecorp has a $49.1 million exposure.
The project stopped after the military coup in December 2006.
