Squeezed Orange investors face moratorium call

Investors in Doug Somers-Edgar's Orange Finance owed more than $50 million will be asked to approve a moratorium in May, more than four months after the company ceased making repayments to investors.

David Gibson of Matrix Funding Group, a company that manages Orange's business, yesterday confirmed a letter had been sent to Orange investors advising them that Matrix expected they would receive moratorium documentation in early May and would be advised of a meeting to vote on the proposal.

Gibson did not give any information about the time-frame or level of returns to investors who, according to the most up-to-date set of accounts available, are owed $50.17 million, not including accrued interest.

Last year Somers-Edgar, who founded the investment advisory business Money Managers, told Orange Finance debenture holders the property market squeeze had put some of the company's largest loans at risk and it had decided to stop repaying maturing debentures and interest from December 22.

Orange ceased raising money from the public last August. It mainly lent funds for residential first mortgages, after raising debentures via Money Managers, from which Somers-Edgar stepped aside in June.

Money Managers has previously been criticised for the way it channelled funds into investment products associated with itself and Somers-Edgar, including six trusts called First Steps, which closed two years ago owing more than $450 million.

Should Orange secure a moratorium, it would be the 10th finance company to stave off receivership in this way but last week's report by the Registrar of Companies criticises the model for the lack of regulatory oversight.

The report sparked a call for a parliamentary inquiry into finance collapses. A spokesman for Commerce Minister Simon Power this week told the Business Herald the minister wanted to see the terms of reference before deciding whether to back an inquiry.