Wind it up, say angry St Laurence investors

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

A St Laurence investor wants the financier wound up and says it should never have been allowed 13 years to repay people.

Rowland Crone, who with his wife Marvyn have $20,000 in the troubled business, says investors will rue the day two years ago that they voted to allow it so much breathing space.

The St Laurence board yesterday said it was running out of money and issued an ultimatum to investors: either swap your debt for shares or the company goes into receivership.

The Crones are in with 9000 others owed $245 million by the Wellington financier which cannot meet its debt repayment plan.

Debentureholders are owed $234 million and capital noteholders are owed a further $11 million.

The company revealed yesterday how bad its situation was.

"Due to the extremely difficult property market, the company 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," St Laurence announced.

Just before Christmas two years ago, investors overwhelmingly voted to allow St Laurence 13 years to drip-feed payments to its clients. It is the longest repayment period of finance companies in moratorium.

Yesterday its managing director, Kevin Podmore, said the property market was extremely difficult and the business will not be able to meet the agreed obligations to investors.

Investors will now be called to meetings in late June or early July to decide on the future, which Podmore said could be receivership.

The alternative will be a proposal where debentures and capital notes in St Laurence can be swapped for shares in a new special-purpose company, St Laurence Holdings, which Podmore said had been established to buy St Laurence assets.

"It will allow us to complete our sell-down programme in an orderly manner, but more importantly preserve the value of St Laurence Ltd's funds management business and hence provide a better outcome for our investors," Podmore said.

He said corporate advisory firm Grant Samuel had been commissioned to write an independent report analysing the options investors were facing.

In a letter to investors, Podmore recommended against the receivership step and said the directors got independent advice from accountants McGrath Nicol on the value that could be realised that way.

"McGrath Nicol's analysis indicates that the funds management business would be realised at a large discount to book value," Podmore said.

The Crones were angry about the situation, saying it came after the failure of Strategic Finance, trouble with Hanover and many others where they had put money. The Crones invested in six finance companies.

"People are suffering," Marvyn Crone said.

"It's not fair. I know of a woman who has to get a job washing dishes to be able to buy a $2 present for her grandchild."

Rowland Crone said he was angry about St Laurence and other financiers but he was particularly angry about financial advisers who had recommended these businesses.

Marvyn Crone questioned the lifestyles of finance company bosses, saying they did not seem to suffer.

Those hit hardest were the retired who had trusted the word of their advisers, she said, and were now left without an income.

St Laurence update 'not authorised'

The Trustee for St Laurence, Perpetual Trust, said yesterday that the board had no authorisation to update investors without its approval.

It will be meeting St Laurence to discuss an investor update letter and is expecting to issue a statement today.

"St Laurence is operating under a deed which requires the company to have the approval of the trustee for any update provided to investors.

"This letter did not have our approval, in fact we specifically asked that the letter not be sent," said Matthew Lancaster on behalf of Perpetual Trust yesterday.

In the letter, managing director Kevin Podmore proposes that St Laurence will seek to put two proposals in front of investors: either receivership or a debt equity swap for shares in a new company which would buy the St Laurence assets.

Under the equity deal, Podmore would be released from his personal guarantee, Lancaster said.

"We are well advanced with considering the options available for investors. We will issue a statement tomorrow following our meeting with the company," said Lancaster.

St Laurence:

* Froze funds in June 2008, owing $245 million.

* Has paid back about $25 million to $30 million so far.

* Manages NZX-listed National Property Trust.

* Manages ex-St Laurence Property & Finance, now Irongate.

* Manages a collection of real estate syndicates.