KEY POINTS:
Bridgecorp investors may receive less than 20 per cent of their principal back, the failed finance company's receivers said yesterday after slashing expected recoveries because of "deteriorating market conditions".
In a letter sent to investors this week, John Waller and Colin McCloy of PricewaterhouseCoopers reduced their estimate of recoveries to secured debenture holders from the 25 to 74 per cent range to 19 to 63 per cent.
"Unfortunately, deteriorating market conditions and subsequent events have had a material adverse effect on the receivers' ability to recover outstanding loans and realise assets and has regretfully reduced our assessment of potential investor recoverability," Waller and McCloy said.
Bridgecorp, led by tarnished former 1980s high-flyer Rod Petricevic, collapsed in July, owing investors almost $460 million.
Its failure sparked an investor rout that contributed to the receiverships of a further nine finance companies.
In their latest estimates, Waller and McCloy said Bridgecorp's assets, excluding the $106.6 million tied up in stalled Fijian resort development Momi Bay, would be worth about $195.9 million at best but possibly as little as $101.5 million. When Bridgecorp was placed in receivership they had a book value of $488 million.
Excluding the Momi Bay loans, the best investors can hope for is a 39 per cent return.
Waller and McCloy said they were working with Momi Bay's developer and potential financiers "with the aim of securing funding to complete development works and realise this asset in an orderly manner".
"However, until the outcome of these negotiations is known, we believe it prudent to note this amount as a separate recovery item, with a range of nil to $106.6 million."
They said factors hampering the recovery on Bridgecorp's $254 million in New Zealand loans included difficulties in refinancing property developments because of "liquidity issues in the finance sector", a slowing in the property market, and updated valuations on loan assets falling short of those obtained by Bridgecorp before it went bust.
