Strategic Finance receivers say repayment due early Sept

The abandoned Soho Square property development in Auckland's Ponsonby - which Strategic Finance lent money to. Photo / Steven McNichol

The receivers of failed finance company Strategic Finance are to make an interim payment to investors of between 1.5c and 2.5c in the dollar within the next four weeks.

The total amount involved in the distribution would be between $5.5 million and $9.2m, receivers John Fish and Colin McCloy of PricewaterhouseCoopers said in an update to investors.

The process of selling Strategic's loan book had been delayed due to the complexity of some exposures and the time taken in obtaining valuations on the 20 top loans.

Indicative bids for the loan book had been received on June 14. Certain parties had then been invited through to the next round of the sales process, and were now carrying out further due diligence, the update said.

Updated valuations on the top 20 loans had been a requirement of all interested parties, and one valuation remained outstanding.

That related to a large and complex commercial development which secured Strategic's largest loan by net loan book value.

"Significant time and effort is being expended by the borrower in providing all required information to the valuer," the update said.

"Given the size of the loan, all interested parties have advised that they will be unable to submit final bids until they have received this valuation."

In most cases, the updated valuations were at levels significantly below the net loan book value in Strategic's management accounts as at February 28 this year.

It was now expected that final bids for the loan book would be received next month. Once they were in, the receivers would decide whether to go ahead with a sale, or whether the receivers would continue to recover the loans.

Any potential recovery range would not be announced until after the sales process was finished, the update said.

Strategic's property loan book consisted of 87 loans with a total net book value of $229.1m as at February 28.

Since the receivership started in March some properties had been sold, while the update noted that achieving loan recoveries remained challenging due to market conditions and, in certain cases, enforcement action by prior ranking security holders had resulted in nominal or no recoveries for Strategic.

The receivers' first report in May showed $367.8m owed to about 10,000 secured debenture investors, $1.5m to about 65 unsecured depositors, $21.8m to 950 subordinated note investors, with interest owed of $54.7m.

- NZPA