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Hanover losses mount – no longer promising full repayment
November 10th, 2009Hanover Finance has announced that it’s moratorium promise of full repayment of investor funds can no longer be met. It now sees only a 70% “estimated return to secured depositors”.
In a statement, directors said “there has been a significant deterioration in the property development sector resulting in a disconnection between property valuations and the market value of assets”.
The returns for investors in United Finance have been re-estimated at 90%, also a discount from the promised “full repayment”.
Here is the Company’s statement:
The rapid deterioration in the commercial property development market, together with requirements under the International Financial Reporting Standards (IFRS), have impacted heavily on Hanover’s result for the year ended 30 June 2009, says David Henry, Hanover Finance Chairman.
“As we reported to investors in September, property market indicators are still moving in a negative direction. When Hanover entered into the Debt Restructuring Plan (DRP) last year we anticipated the property market stabilising and potentially showing signs of recovery in late 2009 early 2010. However, there has been a significant deterioration in the property development sector resulting in a disconnection between property valuations and the market value of assets.”
Mr Henry said this had resulted in a larger number of borrowers being unable to repay or refinance their loans as they fall due.
Directors are attempting to reach an appropriate balance between collecting sufficient funds to meet the repayment schedule under the DRP, and adding value to those loans and other assets that are expected to yield better value if held for a period of time. However, given current market conditions, the directors believe the financial result will fall well short of our previous estimates and the expectations we know our investors have.
“The current forecast indicates we are no longer likely to achieve full repayment to investors under the DRP. Directors have estimated the return to secured depositors is likely to be approximately 70 cents for Hanover Finance investors. United Finance investors can expect estimated returns of approximately 90 cents. At this stage, we are unable to forecast any repayment for subordinated note and bond holders.”
Mr Henry said this repayment estimate will depend upon whether further loan provisioning is required.
“Secured investors have already been paid 6c under the repayment plan.
“Directors, management and staff are disappointed with this forecast repayment . We have written to all investors today to update them directly regarding this information,” said Mr Henry.
Shareholder Mark Hotchin said, despite this negative development, Hanover remains committed to providing the best possible result for investors in light of these circumstances.
Tags: David Henry, Havover Finance, Mark Hotchin, United Finance
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November 10th, 2009 at 6:49 pm
“However, there has been a significant deterioration in the property development sector resulting in a disconnection between property valuations and the market value of assets.”
AKA a difference between fact and fiction.
November 10th, 2009 at 6:49 pm
Oh well, I’m happy with my 8% government guaranteed SCF investment. Come maturity I will run for the hills should the GG not be extended.
Would never have touched one of these dodgy outfits otherwise.
Hanover….what did people expect?
November 10th, 2009 at 7:36 pm
I am surprised they even project 70% at this stage, still…
November 10th, 2009 at 7:44 pm
70% estimated? I wonder what Bruce Sheppard thinks about all this. He tried to warn the grey hair, blue rinse set that these crooks were only playing with them and he got shouted down. Thats when he said he would only help young people in the future. Watson needs the money for dairy farming in the USA and Hotchin needs some for his multi million mansion in Auckland. Oh, Watson used 1.3 million for his birthday party in Turkey as well. New Zealands version of Bernie Madoff. Eric and Mark. Suckers!
November 10th, 2009 at 7:57 pm
I think Bruce actually said they can f.o into the sunset or similar if they ever want his help in the future
November 10th, 2009 at 8:43 pm
Re – 70% expected. You didnt expect them to come straight out and admit returns would be less than half did you? As time passes they will cut the returns further. I think its called ‘managing expectations’.
November 10th, 2009 at 9:27 pm
Now I know what the letters AH stand for !.
November 10th, 2009 at 9:33 pm
send the receivers in
November 10th, 2009 at 10:19 pm
Remind me what the oldies rejected , 80 % of their money now . Or the possibility of 100 % in 5 years time ? And they trusted Eric the Eel into the future . You nailed it Bruce Sheppard , doff my tin helmet to you sir , bravo !
November 10th, 2009 at 10:53 pm
New Zealand get to a stage were more people on top should be s(m)acked then on the bottom – would save our country BILIIONS !
November 10th, 2009 at 11:13 pm
Yep Bruce Sheppard was shouted down by the grey heads at that meeting.
What fools – 80% last year or 100% in 5 years time – how will they feel if it ends up sub 50% in 5 years – suckered well and truly.
Go Bruce!
November 10th, 2009 at 11:48 pm
So they have essentially lied and misled their investors by initally promising 100% return, and then not delivering. Even though people would have lost the interest on that money. Hotchin and Eric Watson should be paying out these NZ investors with their own cash, as they have essentially used Hanover as their own personal bank account, for their other associated property companies.
ALso hasn’t there been a major turn around and recovery in property in NZ, so how can Hanovers excuse even be valid. I hope the commerce commission rip into these guys, as much as they do with telecom.
November 11th, 2009 at 7:27 am
“resulting in a disconnection”…this can’t be so…the B&T reports say the market is booming….BOOMING! So what’s all this “disconnection” fluff? Must be a different country. Property prices never fall in Noddyland. Even the pm believes that load of old BS. What’s the bet Eric and Mark are short listed for knighthoods. Bound to be National Party Members.
November 11th, 2009 at 7:46 am
My thoughts exactly Wally. House prices are going up, up, up…….so how can this be used as an excuse?
November 11th, 2009 at 7:57 am
Yep, looked after by their mates in PWC (Pricks With Calculators) to fool the punters into a moratorium.
The “disconnect” is that all their deals are crap..
If the Valuations were wrong, why arent they suing the Valuers? hmmm.
It always should have been a Receivership. I mean, really what value is all these (still) highly paid execs adding to the problem of bare land that simply needs to be sold?????
You’d save a fortune getting rid of them.
Knowing some of the assets they have (second) mtges on, I reckon they will be lucky to get 40%
Still I see that Amanda Hotchin won a prize for being the best dressed the other day (Cactus Kate) Nice. Love the way the helicopter set stick together.
November 11th, 2009 at 8:01 am
Oh forgot to add. A couple of years ago before the recession bit, the reinvestment rate for Finance companies plummeted causing huge cash flow issue for them. We saw Hanover out there buying the debt off those companies (like Bridgcorp). They thought they were smart but it hasnt worked out that way eh.
The whole management team should go.
November 11th, 2009 at 8:13 am
The Madoffs in Noddyland sleep soundly knowing they have the full support of the useless stupid govts. I can see it now…Sir Bernie Madoff… adviser to the NZ PM. Give him a go John…put him in charge of the NZ property ponzi scheme.
November 11th, 2009 at 8:29 am
And I spotted someone who lives in Paratai Dr in Orakei with a new Ferrari 599 the other day, wonder how he sleep at night. A dear friend of ours, she’s 82 years old and lost her house in this Hanover saga. Should really rename as company Handover . Anyway, time like this I hope there a hell (and heaven)
November 11th, 2009 at 8:32 am
I have little sympathy for the Hanover Investors who blinked like possums, when they had the opportunity to get back 80% of their investment. They were warned this would happen. When the dust settles they will be lucky to get 30 cents on the dollar – 70 cents is a pipedream.
November 11th, 2009 at 8:33 am
Guys – its commercial as much as residential property which is doing Hanover in. As calculated risk has demonstrated a dozen times commercial RE always lags residential and economic recovery (in the US – I dont see why it will be different here). The last report I saw for Auckland CRE was for it bottom end 2010/start 2011 with vacancy rates at 15% (they are currently 11% I think).
Thus Hanover has to face at least 1 more year of CRE in trouble.
Ergo final returns to debenture holders will be less than 50c in the $.
November 11th, 2009 at 8:45 am
re the Ferrari 599! Aren’t they around $600,000 new? When you have a 10 car garage at home with own commercial carwash you need to keep the garage full.
Yep they are history – that Jack’s Point thing they are into is a total flop with land there worth half what it was and Fletchers having a whole bunch of empty unsold houses worth about $250,000 less than what a handful sold for two years ago.
November 11th, 2009 at 8:50 am
Q: What’s the diff between Hanover and a cactus? A: a cactus has the pricks outside!
November 11th, 2009 at 8:55 am
I agree with Doug – if I were a Handover investor I would’ve taken the 80% immediately. Without a doubt. No way would I have gambled over 5 long years for the sake of 20% more.
November 11th, 2009 at 8:58 am
Quite right TBM. And then theres Kawarau Falls Station. Second mtge of $60 million plus isnt it? Now it looks like Bank Of Scotland wont or dont have the funds to finish it, which means the buyers wont have to settle, so they can kiss that 60 mio goodbye.
Shame really, its a stunning Project.
November 11th, 2009 at 8:59 am
What’s the difference between people giving money to “bishop tamaki” and giving it to hanover?
November 11th, 2009 at 9:02 am
One stupid enough to give their money away willingly!
November 11th, 2009 at 9:05 am
One will get you into ” heaven “. The other gets Eric the Eel into heaven…….Or was her name Heather ?
November 11th, 2009 at 9:09 am
Hi guys and girls,
Just a reminder to try keep the comments above the belt so to speak. Just try to make sure comments don’t contain defamatory material.
Cheers
Alex
November 11th, 2009 at 9:11 am
Wally : Tch , tch !
November 11th, 2009 at 9:17 am
This hanover saga, may be we should say “In Autralia we trust” (i.e the big four banks)
November 11th, 2009 at 9:31 am
lets see the valns on the properties that they have their loans secured against. and those valns will be dated around the time of the morotorium. yeah right.
hes got a whole bunch of valns dated Nov 2006 from valuers working for the developers(some for him as the developer) and hes saying the valns arnt right. put them up so we can see if you are a liar, or not.
November 11th, 2009 at 9:37 am
“As we reported to investors in September, property market indicators are still moving in a negative direction.”
Don’t worry, South Canterbury Finance is leading the way, they stopped provisioning for bad debts on 30 June. Nothing more since then. Those guys at SCF sure know how to keep the trustee off their backs eh?
November 11th, 2009 at 9:42 am
Was that me AT?
November 11th, 2009 at 9:49 am
More of a general comment for everyone Wally
November 11th, 2009 at 9:55 am
Ok..less coffee and more backspacing.
November 11th, 2009 at 10:15 am
@ roger … best comment ive read on this site for years
November 11th, 2009 at 10:35 am
Another RANT. but…it contains my version of the TRUTH about New Zealand.
The only problem with investing these days is a few small little words like…
TRUST or HONE-STY or INTEGRITY.
The only trouble with investing is that in daily life, all the CROOKS are not in PRISON, they are in every facet of daily life, in Parliament, Banking, Real Estate, CON-sultants, even food, like SUPER-INFLATION-MARKETS, supposed aid agencies, like SOCIAL WELFARE rorts, CIVIL SERVICE rackets, COUNCIL RAPES, sorry that was RATES, WFF, LAC, AND SHELL games like PETROL & GAS and ELECTRIC suppliers, all stealing as fast as they can think up another SCAM to steal from the gullible and weak.
A bank or finance company is a SLOT MACHINE, you might be lucky and win, but more likely to LOSE….either way it is guaranteed by the TAXPAYER, so they can lose out TWICE.
The biggest crooks are the ones we voted in to look after OUR future and regulate the RULES we all live by.
It should not be in those RULES to STEAL from us the citizens & taxpayers, and it is not just those in the news recently like Hone & Hide & Douglas & Carter & Dunne & all the others GRAFTING and openly double dipping their snouts in the trough, but more importantly those who allow these blatant frauds are also guilty by ASSOCIATION and are corrupted themselves by their NON-ACT-ION in allowing them to be PERPETUATED.
Corruption is rife in the land of GODS-ZONE….and it is even in RELIGION now, must be our DESTINY to be screwed at every turn, by every body you should be able to TRUST.
For the size of NEW ZEALAND we seem to have more DIS-HONE-st people than any other CITY in the world, with a similar population.
Is it not a fact that ANY bank, politician, super market, drug dealer, gang, social welfare cheat, shon-key churches, leaky homes builders and associated councils, etc, can get away with fraud and graft and rorts, with IMPUNITY because we have no body in POWER who is not CORRUPT themselves.
I defy anyone to name an HONE-ST person in politics today. Morally or financially, they all steal or cover up graft daily, some in the name of RACE, some in the name of Socialism, some in the name of Capitalism, some just because they can steal …legally & blatantly from the elderly and the young.
New Zealand should look to the FUTURE.
This used to be a nice place to live, even BERNARD came back to better his life, but maybe he did not know the TRUTH, before he arrived back.
I bet like the TRUTH paper, that has totally FOLDED like a pack of cards and he learnt the hard way, the TRUTH of living here in New Zealand in 2009.
I can only commend this forum for being able to advocate CHANGE, and I do not mean the small change in our pockets after taxes and rorts to pay those dishonest people I referred to above.
Unfortunately I could write forever, because the above is not an exhaustive list.
I see this daily deterioration in honesty in daily life, nearly everyone is trying to scam everyone else. If it is not INTEREST FREE purchases, it is over priced dross and tat, over inflated priced farms and houses, commercial buildings, food, over priced fuel due to taxes, over inflated TAXES to pay for OTHER people waste. etc etc.
I can give a simple example of the corruption of youth.
A so called solo parent of a friends acquaintance has the father a WORKING partner living with her, she claiming the DPB, home allowances etc, visiting the food banks for more free hand outs, visiting Social Welfare as a BANK to pay her profligate bills and gets free creche days to dump her child on others, so she can and he can have a whale of a life at the taxpayers vast expense and end up with MORE than most.
Contrast this with an honest family, both working to pay their own way. The hard way.
Who is the mug, what ever happened to fair play and integrity.
New Zealand to live from my perspective is now a divisive, racist, dis-hone-st, fraudulent place, with exponential rorts of all kinds, and sinking fast.
Are there no people left with real integrity MR KEY. We got rid of one HELL-en to be replaced with another labour-ious problem..
Because I would like to THINK that there may be a glimmer of HONESTY and TRUTH there some where, otherwise we might just all be as corrupt and dishonest as the examples I see and read about daily.
Borrow your way out of this one…MR KEY…..what for…. more crooks to prosper and dip at the trough.
Keep the billions flowing….to the wrong people….I do not THINK so.
The corrupt are not all in PRISON…unfortunately….otherwise they might not get a VISA to TRAVEL.
We also may not be able to borrow as the rest of the world learns the TRUTH…eh…BERNARD.
Keep on plugging away.
November 11th, 2009 at 10:43 am
I agree with Alex. It shows how low or deep we can go in this country.
November 11th, 2009 at 10:46 am
Too true Sore-Loser. I used to be able to count on both hands the number of politicians who you felt were in office because they believed in this country and were trying to make it a better place. There did seem to be a few. Where are they now? Rod Donald I thought was one of the last, and I’m not even Green leaning. Far from it!!
It seems to be these days, that if you can’t start up a finance company, may as well get into politics.
November 11th, 2009 at 10:50 am
I think it’s the other way around, Hamish! You do your stint in politics THEN become a director of a finance company, using your name and contacts as the hook.
November 11th, 2009 at 10:52 am
This is goin to be fun. How will the govt prevent the exodus of the skilled and young. Will it be a honey trap student loan write off for those who stay to pay the taxation way. Or maybe some advertising spin with the plea for god to save the place as the background music. Perhaps Tolley will hand the stay at home a lolly while riding her trolley in a fit of folly.
November 11th, 2009 at 11:02 am
I don’t know where the 80% figure has come from. The receivers may have 80% but there were no guarantees. I do agree with the sentiment here, receivers would probably have been better in Hanover’s case – but they come at a cost also.
November 11th, 2009 at 1:24 pm
Mike in Welly Says:
November 11th, 2009 at 11:02 am
I don’t know where the 80% figure has come from.
Thats right, there was never any 80% figure from teh receivers, all PWC said was under receivership investors would get back LESS. Therefore the way they voted was to be expected. It was a bit like the ING case, where investors could vote to get the payout, or take the risk of a prosecution against ING and ANZ in order to get the full payout,
DIdn’t Mark Hotchins promise that investors would get back 100%, and that he would pump more capital in if that didn’t happen? I think he needs to show his face, and explain things.
Mum and dad investors actually voted for 100% of their capital. Now Hanover have changed the conditions, surely that would mean that investors are entitled to revote, as 70% isn’t what they voted for. They were promised 100%. Perhaps they could now vote to push it into receivership, and let the securities commission investigate them.
November 11th, 2009 at 2:11 pm
Receivership is the only answer to stop the bleeding. The shocker is Eric and Mark can hide until the smoke clears and they can do it all over again. These people shouldn’t ever be able to front another Ponzi company again.
November 11th, 2009 at 3:02 pm
Doug Says:
November 11th, 2009 at 2:11 pm
Receivership is the only answer to stop the bleeding. The shocker is Eric and Mark can hide until the smoke clears and they can do it all over again. These people shouldn’t ever be able to front another Ponzi company again.
Probably was, although which is the lessor of two evils. PWC also recommended to investors not to place it into receivership. At least receivership would allow the company to be investigated by the securities commission, although they are toothless. The other Hotchin brother is already being looked at with Nathans finance, but these things take an eternity to get to court, and the only people who win are the lawyers and accountants.
November 11th, 2009 at 7:55 pm
Bruce Shepphard rips into Watson and Hotchin on Closeup tonight – suggest that people boycott Noel Leeming & Bond and Bond and that if you see these guys out walking run them over!
Should be live at http://www.tvone.co.nz shortly in the on demand section
http://tvnz.co.nz/close-up
Shep fully sums up the situation and pulls no punches. It’s daylight robbery!
November 11th, 2009 at 11:10 pm
http://tvnz.co.nz/close-up/hanover-outcome-leaves-bitter-taste-3135805/video
November 11th, 2009 at 11:21 pm
Ugg boots again . Wrong season and site , Nicky . Try the Baffin Island Chronicle , see if the Inuit need your product !
November 12th, 2009 at 4:02 pm
The Bank Manager Says:
November 11th, 2009 at 7:55 pm
Bruce Shepphard rips into Watson and Hotchin on Closeup tonight – suggest that people boycott Noel Leeming & Bond and Bond and that if you see these guys out walking run them over!
A pity watson actually sold B&B and NL. I am sure that comment therefore will not do them any good.
November 13th, 2009 at 9:30 am
Watson hasnt owned Noel Leeming or Bond and Bond for over 5 years now, its owned by the australian company Gresham Private Equity
November 15th, 2009 at 6:13 pm
http://www.3news.co.nz/John-Campbell-looks-for-Hanover-co-owner-Mark-Hotchin/tabid/367/articleID/129275/cat/84/Default.aspx