St Laurence goes into receivership

St Laurence is proposing investors swap their debt for shares to stave off receivership. Photo / Brett Phibbs

Another finance company has collapsed with Perpetual Trust today appointing Barry Jordan and David Vance of Deloitte as receivers of St Laurence to protect the interests of 9000 investors owed $245 million.

The receivers took control of the company and its assets today, and will report to investors in six to eight weeks.

St Laurence earlier this week proposed a debt-for-equity swap, saying it would soon run out of equity due to an extremely difficult property market.

Investors voted in December 2008 for a moratorium, which gave the company time to pay back much of the monies owed to investors.

Perpetual Trust said that to date St Laurence has paid $10m to investors but recently it indicated that it would soon become insolvent.

The appointment of a receiver would provide more certainty than any other proposal, said Matthew Lancaster, head of corporate trust for Perpetual Trust.

"In appointing receivers today we are ensuring that a person independent of the current management and directors will oversee the orderly realisation of assets on behalf of investors," he said.

St Laurence managing director Kevin Podmore argued earlier this week that the debt-for-equity swap would allow the company to complete a selldown programme in an orderly manner, preserving the company's fund management business and hence providing a better outcome for investors.

Mr Lancaster said the trustee was ensuring that personal guarantees provided by the corporate guarantors and Mr Podmore remained in place rather than being released as they would have been under St Laurence's proposal.

"This may provide some additional protection for investors, and we feel that the guarantors owe it to investors to permit their ability to honour the guarantees they gave them to be tested in the normal way.

"Importantly, we have ensured that the management companies which have management contracts for the National Property Trust and Irongate Property Limited have been kept out of receivership. This will avoid any adverse effect on the continued operation of those contracts."

Under the debt-for-equity swap, which relocated investors into a new company, the existing management would have remained in place, and in that and other respects St Laurence's proposal provided no certainty that the very disappointing performance of the company in the recent past would improve.

It was simply a device to give management another chance, and to do so free from trustee supervision.

There was no certainty that there would be a market for the shares issued to investors.

"It is important to explain that the company has not been fully open with the trustee in the manner in which they have acted. In addition to sending an investor update letter with the company's own proposals that was not approved by the trustee, they have also not been able to provide the trustee with the McGrath Nicol report they commissioned, nor of any report from Grant Samuel despite referring publicly to each yesterday, and also they have not provided proper up-to-date information on the present value of the assets of the guarantors.

"This is a very clear case where the interests of stockholders will be served by removing the current directors and management from the process of recovering monies for investors," said Mr Lancaster.

- NZPA