Structured Finance suspends payments

Martyn Reesby

Property lender Structured Finance Ltd has suspended payments to its 172 debenture holders owed about $33 million.

SFL's decision to suspend debenture and interest repayments was as a result of the deteriorating property market's impact on its loan values, and the uncertainty over loan settlements, the company said.

"It really is a timing issue between when borrowers can repay loans and when loans are due to be repaid to investors," a spokesman said.

The company has written to its debenture holders about its decision, made on Monday. Once its loan book has been reviewed independently, the company will report to its trustee, Perpetual Trust, who will decide what will happen.

The directors believed the best option for debenture holders would be a managed workout of its loans, rather than forced asset sales in a depressed market, the spokesman said.

The nine-year-old company was well capitalised and had no related party lending or offshore loans. Its loans were principally secured via first and second mortgages over residential and commercial property in Auckland, he said.

The company had total assets of $53.5 million and total liabilities of $39.3 million, which all had maturity dates of two years or less, according to a debenture stock prospectus dated November 2008.

SFL is owned by the Martyn Reesby Family Trust, according to the prospectus, with its principal and director Martyn Reesby, former manager of Fay Richwhite's commercial finance arm between 1985 and 1994.

- NZPA