St Laurence ultimatum - receivership or shares

Photo / Brett Phibbs

The board of finance company St Laurence Limited (SLL) have today told its investors that either they vote to swap their debt for shares, or the company will go into receivership.

Due to the "extremely difficult property market", St Laurence "would soon be in a position where it would run out of equity and as a result would not be able to meet some of its obligations to investors under its November 2008 Recapitalisation Plan." says a press release issued this morning.

"Consequently, its Debenture Stock and Capital Note investors were now effectively the owners of the company."

Some 9,000 investors owed NZ$250 million in frozen funds agreed to give the company until 2013 to repay 70 per cent of its debentures.

A meeting has now been called where these same investors will be asked to exchange their debenture stock and capital notes for shares in St Laurence holdings - the company set up to acquire the finance company's assets.

If this is not approved, then it will be put into receivership.

Company directors have commissioned an independent report from Grant Samuel to analyse the merits of the alternatives they face.

"We appreciate this is not what investors signed up for nor the outcome we had hoped for when we put forward the Recapitalisation Plan in 2008," said SLL managing director Kevin Podmore.

"We understand that investors want their money back and in the current market we sincerely believe that exchanging their debt investment for equity is the best way to achieve this. It will allow us to complete our sell down programme in an orderly manner, but more importantly preserve the value of SLL's funds management business and hence provide a better outcome for our investors."



ST LAURENCE:

Froze: June 2008

Owed: $250 million to 9000 investors

Paid back so far: 8c in the dollar to debenture holders, 4c to Capital noteholders

Total payback time: 13 years

St Laurence has the longest repayment period of all those in moratorium at 13 years and has paid back about $10 million so far.

The company reached an agreement with its investors in December 2008 and at the time Podmore said he hoped to pay investors back 100 per cent of their principal as well as interest.

Its plan includes a pledge by Podmore and associated parties to tip in up to $20 million of their own money to help make up any shortfall as well as $10 million in assets to boost the company's balance sheets.

A report by PricewaterhouseCoopers at the time told investors the put option, guarantee, and capital injection had "questionable value" given it included assets such as a stake in Auckland's Hilton Hotel, whose value was by no means rock solid.


- NZ HERALD STAFF