Bad news for investors in IMP fund

Ruth Richardson. Photo / Mark Mitchell

A finance company chaired by former Finance Minister Ruth Richardson has told investors not to expect all of their money back.

The IMP Diversified Income Fund entered into a moratorium agreement with investors in June last year promising to make a full repayment to debenture holders. The company owed a total of $16.5 million to debenture and capital noteholders at the time.

Since then it has paid back 40c in the dollar but now directors Ruth Richardson and rich-lister Chris Alpe have told investors a full repayment is unlikely because the difficult domestic environment and the global recession has made it harder to sell its investments for full value.

"It is now looking unlikely that IMP debenture stockholders will be fully repaid.

"Unfortunately the likely shortfall for debenture stockholders means that it is also looking unlikely that there will be funds left over for capital stockholders once IMP's moratorium process is complete," the pair said in a letter to investors.

The directors said it had been a mixed year for the company. While a $5 million loan had been fully repaid in January, other investments had suffered in the difficult economic climate.

Company accounts show the IMP fund made a loss of $2.287 million for the year to June 30, that was on top of a $10.612 million loss in the previous year. The company also switched managers as of June 1 from Intellectual Capital Partners - an investment company run by American-based Kiwi David Teece, to Paget Capital Management.

The directors said they hoped to make a further repayment to debenture holders in October but could not say how much money they would give back.

Strategic Finance also said this week it would not be able to repay its debenture investors in full.