St Laurence's 9,431 debenture holders face zero return on 34% Irongate stake and management contract

St Laurence's 9,431 debenture holders face zero return on 34% Irongate stake and management contract

By Gareth Vaughan

More than 9,000 secured debentureholders in failed property lender St Laurence are likely to get back something towards the low end of the receiver's 15 cents to 22c in the dollar estimate following the receivership of Irongate Property, in which St Laurence has a 34% shareholding and owns management contracts.

Irongate, facing the repayment of NZ$45 million worth of bonds to 1,545 retail investors on May 15, was placed in receivership last week. Deloitte's David Vance and Barry Jordan, who are also St Laurence's receivers, were appointed receivers.

Vance told interest.co.nz that St Laurence's shareholders were last in line to get money back from Irongate. Ahead of them are BNZ, Westpac, Bluestone Group and Allied Nationwide Finance, which is itself in receivership. Irongate's interim report, for the six months to September, shows bank debt  - including BNZ, Westpac and Bluestone - of NZ$87.2 million. Vance said Allied Nationwide was owed "less than NZ$10 million" through a second mortgage over a property. It stands behind Bluestone.

Bluestone arranged about NZ$45 million of funding for Irongate last July which helped it repay NZ$30 million of retail bonds.

The bondholders and Bluestone have general security agreements, Vance said. BNZ, Westpac and Allied Nationwide have specific security arrangements over individual properties. Irongate has no employees.

The outlook from the Irongate, formerly St Laurence Property & Finance, receivership isn't good for St Laurence's debentureholders.

"In the very early days that we find ourselves in in the (Irongate) receivership, I would say that the most likely scenario is the shareholders will get nothing," said Vance. "And if I was trying to say what the percentage chance that they will get something is, it would be quite low."

"Our expectation, based on what we know two days into the receivership, is that the money is likely to run out as we pay the bondholders."

An insolvent St Laurence was tipped into receivership by its trustee Perpetual Trust, which is also Irongate's trustee, last April owing 9,431 secured debenture holders NZ$212 million in principal and NZ$27.1 million in interest. Capital noteholders, owed NZ$12.3 million including interest, won't get anything. See the receiver's second report here.

St Laurence debentureholders got back 10c in the dollar prior to the receivership and have since got another 9c. The receivers have forecast total returns on debentureholders principal of between 15c and 22c in the dollar, excluding the 10c paid back before the receivership.

Vance said Deloitte was keeping same forecast range but now expected returns in the bottom half of that range following Irongate's demise.

"In order to achieve the top of that range we were going to have to get a good return out of the Irongate assets."

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