Dominion's Butler calls trustee arrogant, receiver inexperienced
19th Sep 08, 4:14pm
Dominion Finance Group (DFG) deputy-chairman Terry Butler has launched a campaign to reverse Perpetual Trust's decision to put the property financier into receivership. Calling on debenture holders to support his campaign, he set up a website where he labeled Perpetual's decision as "arrogant," and called the staff of receivers Deloitte "very inexperienced." In an letter to investors obtained by interest.co.nz, Butler challenged Perpetual's decision to place DFG in receivership and pointed them to his new website, saying: "I firmly believe it is for investors to determine the future of the company and have taken this step at the request of several hundred investors who consider Perpetual's decision not to be in the best interest of investors." "To date Perpetual are determined not to allow you the investor the opportunity to determine how your money should be managed," Butler said on the website. In an interview with interest.co.nz, Butler said that "whereas Covenant (trustee of North South Finance (NSF)) wanted to work with us (regarding a moratorium for NSF), we would ask Perpetual what they would want out of a moratorium and they would just sag their heads and wouldn't even bother talking about it." As shown in our definitive Deep Freeze List, DFG has currently frozen 6,055 deposits worth NZ$244 million. Butler and his family own 65% of DFG and are the biggest major debenture stock investors apart from HBOS, holding in excess of NZ$5 million in deposits. The website is focused on getting 10% of DFG investors to call for a meeting with Perpetual Trust to vote to overturn the receivership DFG was placed in on 10 September 2008. Butler thinks that an orderly wind down of DFG under the control of Korda Mentha would best suit investor's interests. "At that meeting, debenture stock holders, on achieving a 75% vote of stock issued, can allow DFG to act under a Moratorium to wind the company down, under the control of Korda Mentha," Butler said. "I dispute Perpetual's claim that they did a complete and thorough review of the Company's position and considered numerous issues, as it was clear their decision had been made well before presentation of the Moratorium proposal," he said. DFG's sister finance company, North South Finance, was allowed to conduct a moratorium by Covenant Trustees. On Perpetual's decision to place DFG in receivership, Butler said: "This is a non commercial and arrogant decision of Perpetual Trust and will cost DFG investors a substantial amount of money." In a letter to DFG investors dated September 17, Butler said that Deloitte had admitted previously to DFG that they did not like the industry and had no experience in it. "In 2007, when we determined as a board that we needed to put out for tender our audit, we went to three companies and the answer from Deloitte was that they didn't like the industry and had no experience in it," Butler told interest.co.nz. "Even in the few days since the receivers were appointed, it has become obvious that the receivers and staff are very inexperienced and know little about the operations of finance companies and interested only in selling off assets as fast as possible to generate cash flow," Butler said on the website. One example of Deloitte's inexperience that he gave to interest.co.nz was: "One staff member (of Deloitte) wanted to know where we held our stock records and where our stock was kept?" "We don't have any stock, except in the bank," Butler said. Butler attacked Deloitte's lack of experience in the property lending industry, asking how they could be expected to manage the loan book of a property lender? "The best people to manage loan accounts to work through issues are the existing staff, but the behaviour of Deloitte is such that they are forcing staff to make the decision to leave now rather than put up with the behaviour of the receivers," he said. "It should also be noted that Louise Edwards, Perpetual CEO, did not attend any meetings and despite repeated requests to Perpetual as to what they would require in a Moratorium wind-down, nothing was forthcoming," he said. Edwards told interest.co.nz that she couldn't comment yet, as Perpetual are still looking through Butler's new website. She said she would get back in touch on Monday. Rod Pardington of Deloitte was not immediately available for comment. Dominion's bankers are BOS International (Halifax Bank of Scotland), which is owed NZ$70 million, and ASB, which is owed NZ$20 million.