KEY POINTS:
Debenture holders in Strategic Finance would receive 30 per cent of their investments in instalments by March 2010, with the rest put into secured listed bonds, under a proposed capital restructure.
The company suspended redemptions last Thursday stopping 15,000 investors from taking out around $325 million.
It is owned by Australian investment company Allco HIT which has been in talks with a consortium since July to buy out the business with support from the Australian arm of the Halifax Bank of Scotland (HBOS).
Today Strategic said the terms of the restructure were yet to be finalised and may change. It would make a more detailed announcement about the capital restructure once sale and purchase negotiations were finished.
The proposal now was for debenture holders to be repaid 30 per cent of their investment in three equal instalments on March 31 2009, September 30 2009 and March 31 2010.
The balance of their investment would be invested in three, four and five year secured listed bonds in equal proportions.
The interest rate would be reset, and interest would be paid quarterly in arrears, Strategic said.
The restructuring plan proposed that subordinated debt holders would also continue to receive interest paid quarterly in arrears. But they would be asked to alter their investment to first ranking five year secured listed bonds.
The perpetual preference shareholders would be asked to agree to the release of the Allco HIT guarantee.
Any capital restructure was entirely conditional on negotiations being completed between Allco HIT and the consortium of company management and Uberior Ventures (Asia), a subsidiary of BOS (Australia), Strategic said.
The capital restructure was also subject to Strategic Finance board and trustee consideration.
The company's directors include New Zealand Rugby Union chairman Jock Hobbs.
Strategic chief executive Kerry Finnigan said the acquisition negotiations were going well.
But during the period of due diligence more finance companies and some well respected investment funds announced difficulties meeting the increased level of maturities .
"On the back of this the bank became concerned as to exactly what was happening with investor sentiment in NZ.
"The bank was very clear that whilst it was prepared to provide capital and additional funding for the business that this was not, in any way intended, to substitute or underwrite the debenture holders' position," Finnigan said.
The bank was prepared to continue with the transaction but only on the basis that the company undertake a capital restructure which would involve all stakeholders.
That capital restructure involved the management and HBOS acquiring Strategic Investment Group - the parent company of Strategic Finance - and providing additional capital into Strategic Finance.
HBOS would also increase its funding line to Strategic Finance to $150 million.
- NZPA
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