By Gareth Vaughan
In a potential blow for the 9,000 investors in failed property financier St Laurence, Bluestone Capital Management has withdrawn from talks to buy two contracts to manage Irongate Property from St Laurence's receiver Deloitte.
Bluestone says it has pulled the plug on discussions that might have led to it taking on Irongate's asset and investment management contracts. This follows several months of talks with the Kevin Podmore-chaired Irongate and Deloitte. Bluestone CEO Peter McGuinness told interest.co.nz amongst other things, Bluestone's objectives included helping Irongate manage its NZ$50 million retail bond repayment due in May this year.
“Despite our offer to work more closely with Irongate to tackle some of the challenges facing the business, the current manager and the board of Irongate ultimately concluded that there were preferred alternatives that should be explored in managing its funding obligations," said McGuinness.
"To avoid further confusion in relation to our potential involvement in the management of Irongate, we have therefore written to the board of Irongate indicating the withdrawal of our interest in the management contracts."
St Laurence shareholding
St Laurence also owns a 34% stake in Irongate, formerly St Laurence Property & Finance. An insolvent St Laurence was tipped into receivership by its trustee Perpetual Trust last April owing NZ$245 million to about 9,000 investors. Receiver Barry Jordan of Deloitte told interest.co.nz in December that the prospect of St Laurence's investors' getting back the promised up to one third of the money they're owed depended on the fate of Irongate Property.
Jordan also said in December, however, that the receivers had talked to other parties as well as Bluestone who were potentially interested in taking over Irongate's management and he hoped to have a deal done by the end of January.
Today Jordan told interest.co.nz that talks were continuing with another party, which he declined to name, interested in buying Irongate's management contracts. Its offer was "quite different" from Bluestone's. It was a "critical week" with meetings with Perpetual Trust and he hoped to be in a position to provide more detail by the end of the week.
"There are a number of interested parties - the Irongate board, the trustee and the (St Laurence) receiver - so we've got to get everyone in agreement on the best course of action for Irongate investors," Jordan said.
Trust deed breaches
Irongate has been in breach of two Trust Deed ratios, with trustee Perpetual Trust leaving itself the option of pulling the plug. It faces repaying the NZ$50 million of bonds, paying 9.25% per annum, on May 15 to about 1,500 investors.
In June last year Bluestone arranged a NZ$45 million loan for Irongate with US vulture fund Varde Partners which enabled Irongate to repay NZ$30 million of bonds that matured last July. Irongate also owes money to Westpac and BNZ. Combined with the Bluestone loan, this debt stood at NZ$87.2 million as of September 30 last year.
St Laurence investors received their first repayment, 9 cents in the dollar, last month.
(Update adds comments from St Laurence's receiver Barry Jordan).