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Despite moves to distance itself, Companies Office records suggest stricken finance group Lombard continues to have a close relationship with troubled property investment group Blue Chip.
Lombard Finance & Investments Ltd, which on Thursday said it was unable to make upcoming repayments to its 4600 investors, holds security over various assets of Blue Chip's ASX listed parent company Blue Chip Financial Solutions Ltd.
A week ago, Lombard chief executive Michael Reeves told the Herald his company was examining legal options around Blue Chip's remaining 30 per cent stake in Tasman Mortgages Ltd. A couple of days later, Lombard said it had moved to 100 per cent ownership of Tasman.
However, it appears that Lombard Finance & Investments Ltd is owed money by Blue Chip as it has taken security over a sale and purchase agreement between Blue Chip and Australian Consolidated Insurance Ltd for shares in another business, Tasman Insurance Brokers Ltd. Lombard has registered a financing statement on the Personal Property Securities Register describing the security. The PPSR records do not show how much Lombard may be owed.
Companies Office records also show that Blue Chip transferred its 100 per cent shareholding in Tasman Insurance Brokers Ltd to Australian Consolidated Insurance Ltd on December 20, 2006.
Blue Chip Financial Solutions this week changed its name to Northern Crest Investments Ltd, and failed to produce an update to the market on its future business plans as it indicated it would do last week.
Lombard Finance & Investments Ltd, a subsidiary of the listed Lombard Group Ltd, owes $127 million to debenture investors and unsecured note holders.
The company cited a "systematic failure" in the property development and finance sector for its inability to meet its obligations, but critics have said the company has for some time been too highly geared and has far too much exposure to risky property developments.
It plans to seek a moratorium from investors, giving it time to trade out of difficulties. However, financial adviser Chris Lee believes that Lombard's board and management have done a poor job to date, and do not deserve a second chance.
A December amendment to the company's prospectus showed a big increase in the proportion of its $144 million loan book which are riskier second mortgages, and also showed an unusually high concentration of loans to a small number of borrowers including one of about $40 million. That is believed to be the troubled Brooklyn Rise subdivision in Wellington.
Late last year, the project's original developer, Lance James, sold out to Aucklander Tim Manning, who has attracted attention in the past for his involvement in a number of leaky property developments.
Manning is behind the Turner Waverley development in Auckland and some Blue Chip investors have paid the company deposits on apartments in the project.
In 2006, Reeves and Lombard general manager Alan Beddie pleaded guilty to breaching the Securities Act in relation to the prospectus for a contributory mortgage scheme.
Lombard's chairman, Sir Douglas Graham, is also deputy chairman of the $13.5 billion New Zealand Superannuation Fund's board of guardians.
On Thursday, Finance Minister Michael Cullen indicated he was comfortable with Sir Douglas's performance in that role.
The NZ Superannuation Fund declined to comment yesterday.
Lombard Group shares, which on Thursday fell 60c or almost 75 per cent on the news of its finance arm's difficulties, regained 3c yesterday to close at 23c.
CONNECTIONS
Companies Office records suggest Lombard Finance is owed money by Blue Chip Financial Solutions Ltd.
Lombard holds security over various Blue Chip assets.
The security relates to transactions involving Tasman Insurance Brokers Ltd.
