Mascot Chairman and director connected to Threepwood developer
5th Mar 09, 3:20pm
Mascot Finance chairman Brian Kreft and fellow director David Stock are connected to the developer behind the struggling Threepwood project in central Otago that partly triggered the first failure of a government guaranteed finance company, Companies Office records show. Mascot Finance declared in its accounts that it had no related party lending, a factor watched for closely by the Treasury when it granted Mascot a government guarantee just 7 weeks before it was put into receivership. Kreft's family trust owns a property at Luggate Park, another project developed by Threepwood developer Jim Boult. Meanwhile, Stock is the co-owner with Boult of another property in Luggate Park and the legal address of the share in the property is that of Brian Kreft. Kreft was also a co-director of Shotover Jet with Boult, who was the managing director of Shotover Jet for 16 years. Kreft told interest.co.nz he was not related in any legal way to Boult or any of his affairs, and hence this loan was not a related party loan. "I am not related in any legal way to Boult or any of his affairs," Kreft told interest.co.nz. "I'm flabbergasted that anyone would make an allegation that I'm a related party to Jim Boult," he said. Interest.co.nz is not alleging that this is a related party loan. It is highlighting the connections between Boult, Stock, Kreft and Threepwood. Companies office documents show a company Kreft is chairman of, KSL Financial Limited, has a share in a company directed by Boult called Luggate Village Services Limited. Luggate Park, situated outside of Wanaka, was developed by Boult. Kreft told interest.co.nz that anyone who buys a property in the Luggate Park development also has to have a share in the community company - Luggate Village Services. "It's quite a standard thing," Kreft said. His family trust has a share at Luggate, he said. Fellow Mascot director Stock also owns a share at Luggate, co-owned with Boult, and for which the registered address is C/O Bp Kreft, in Christchurch. "Every person who owns a house at Luggate also owns a share in Luggate Village Services...they have to have a share in the community company and my family trust has a share at Luggate. KSL Limited must own a lot there too," Kreft said.
Mascot's last prospectus, dated June 2008, said in its related parties section: "As at 31 March 2008 there are no advances to directors or entities in which Directors have an interest. The company's policy is not to lend funds to Directors or entities in which Directors have an interest."Mascot's Trust Deed, with Perpetual Trust, defines 'related party' as: "any company which is a holding company of the Company, any company which is a subsidiary of any such holding Company and any Associated Company," Perpetual CEO Louise Edwards told interest.co.nz. Kreft said he was on the board of Shotover Jet with Boult (who was Managing Director there for about 16 years) for a number of years. "I've known Jim for about two decades, as I have known many other members of the business community in New Zealand," he said. Mascot Finance was put into receivership on Monday after Westpac referred the first mortgage on the Threepwood development by Lake Hayes to its recoveries unit. Mascot was a subsequent charge holder on Threepwood behind Westpac. The Domonion Post reported that Mascot had a NZ$15 million exposure to Threepwood and that Westpac was the first mortgagee with NZ$11 million owed. When announcing the receivership, Perpetual Trust said: "In continually reviewing impairments in the loan book the Board has concluded that a major loan is now unlikely to be recovered in full. A write down of that loan would result in a breach of the Company's trust deed. The Trustee and the Board of Directors of the Company concluded receivership was the best option to protect all investors and to ensure all investors are treated fairly." Mascot was the first financial institution in New Zealand to fail after receiving the government's deposit guarantee. It had stopped accepting deposits before the guarantee scheme had even been announced and was put into receivership seven weeks after signing its deed of guarantee with the Crown. It owes 2,558 debenture holders about NZ$70 million. Receiver Paul Munro of Deloitte told interest.co.nz he could not comment on individual loans. We have been unable to contact Boult at various numbers. Edwards said she could not comment on the loan. * This article was first published in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.