Hubbard investors get 3c payout

Allan Hubbard. Photo / The Listener

Allan Hubbard has offered to subordinate his own interests and make up any losses to investors, say the statutory managers of his affairs in a report that identifies low recoveries from large related party transactions to the Hubbards.

The Government put the Timaru-based businessman and his wife under statutory management on June 20, along with charitable trusts, Aorangi Securities, and later, Hubbard Management Funds (HMF). The Serious Fraud Office is also investigating.

Statutory managers Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton New Zealand, in their third report today, are signalling a three cent in the dollar payment to Aorangi investors this month, and a possible further 20 cent payment by the middle of next year. It does not give a final figure for these investors and says its payment is a number of years away.

The report said adjustments reducing Aorangi loan balances by $7 million prior to the statutory management are being investigated.

Aorangi advanced Southbury Group, a company associated with the Hubbards which invested in failed South Canterbury Finance, $10 million and this money is unlikely to be recovered.

Aorangi's possible losses from Southbury and Te Tua Charitable Trust could total $25m. The trust predominantly provides interest free loans. Some loans have insufficient records and some may not be repaid because of verbal agreements with Mr Hubbard. A private investigator is being employed to trace overseas borrowers.

"We consider that Te Tua may be able to repay less than 50 per cent of Aorangi's investment," the managers said.

However, Te Tua will make a payment of at least $600,000 to Aorangi on September 30.

With the help of Mr Hubbard the managers had identified a number of assets that may be sold but there would not be a fire sale.

The timing of payments to 300 investors in HMF is still unclear. Its share portfolio performed positively in the last few months but was affected by the collapse of South Canterbury Finance.

HMF has invested in a number of companies related to Mr Hubbard. The report identifies $19.6m of related party transactions and estimates only $1.075m will be recovered.

HMF's portfolio is high risk, with 24 per cent in unlisted entities, 24 per cent in Australia-listed investments outside the ASX200 and 32 per cent in resource and exploration companies.

Mr Simpson said that there were important legal questions to be considered to ensure that HMF was carefully wound up in a manner which maximised the returns to investors.

Investors may consider they had an individualised portfolio but investors' funds were pooled. Court guidance may be needed on the nature of HMF and appropriate method to distribute money.

The mangers had also become aware of some additional shares in the portfolio that appear to have been pledged as security to third parties.

In the second report the managers said HMF overstated its value by at least 25 per cent on March 31, reporting non-existent investments and cash balances.

- NZPA