St Laurence debenture holders to get 9c in dollar next month but won't see any interest payments

Secured debenture holders in defunct property financier St Laurence will receive their first repayment, 9 cents in the dollar, in late January but won't be getting back any accrued interest.

In their second report receivers Barry Jordan and David Vance of Deloitte say the initial payment will follow them receiving the bulk of the NZ$18.8 million later this month from selling St Laurence's 30 million units in the National Property Trust and the internalising of its management contract which St Laurence owned.

An insolvent St Laurence was tipped into receivership by trustee Perpetual Trust in April owing about NZ$245 million to more than 9,000 investors. It owed 9,431 secured debenture holders NZ$212 million in principal and NZ$27.1 million in interest.

In their first report Jordan and Vance predicted secured debenture holders would get back between 15 cents and 22 cents in the dollar on top of the 10c they got under St Laurence's failed moratorium.

"The first distribution of approximately 9 cents in the dollar is scheduled to occur in late January 2011," the second receiver's report now says.

"Given that there is unlikely to be a full payment of secured principal, no distribution of accrued interest is expected. Similarly, we do not consider there will be any amounts available for unsecured creditors including the Capital Note holders (owed NZ$12.3 million including interest)."

Aside from the National Property Trust interests, St Laurence's other assets consist of a 34% stake in Irongate Property and Irongate's management contract, and a loan book with a face value of NZ$74.7 million before provisions comprising 14 loans, which all bar one were in default at the date of the receiver's appointment.

Jordan recently told interest.co.nz that St Laurence debenture holders' prospects of getting back returns at the higher end of the receiver's estimate depends on how events unfold at the beleaguered Irongate.He said some "good outcomes" had been achieved with the loan book. The second receiver's report notes a "mixture of success" realising the loans with some achieving better results than anticipated and others encountering "further" problems.

"The largest loan in the portfolio involves a glass/metal recycling operation in New South Wales," the report says.

"We have had to work closely with the borrower, potential purchasers and local environmental agencies to ensure any environmental issues are resolved before sales are finalised."

St Laurence also has a NZ$20 million guarantee from its managing director Kevin Podmore and associated companies Auguste, Neuhaus Stonefields and Auguste Albany provided as part of St Laurence’s moratorium plan in 2008. Under the guarantee they pledged to pay NZ$20 million if St Laurence was placed in receivership or liquidation 15 months after the date of the receiver or liquidator’s appointment and there was a shortfall in repaying debenture holders. However, the guarantee is likely to be worth substantially less than NZ$20 million if called in next year.