Strategic Finance's secured debenture holders, who have so far got back just seven cents in the dollar, or NZ$26 million, since the property lender was tipped into receivership in 2010 owing them NZ$367.8 million of principal, are set for another repayment next month.
PwC partner and Strategic receiver John Fisk says in his latest letter to the 10,000 secured debentureholders to expect a further distribution - their third - in April.
"Based on the number of properties under contract (and subject to those sales settling), we expect that a further distribution is likely to be made in April 2012. As soon as we have sufficient funds to make a further distribution, we will write to investors to confirm the amount and timing of the distribution. We note that the distribution could be delayed if property sales do not settle as scheduled," says Fisk.
"We reiterate that realising property in the New Zealand market remains challenging and on a number of the loans, secured over property, it is difficult to assess the level of recovery. This is particularly so for development and coastal properties, of which Strategic is heavily exposed to. These factors will have an impact on the final recoveries that we will be able to achieve for secured debenture investors."
He reiterated an expectation that secured debenture holders were likely to get back between 12% and 26% of the outstanding principal they were owed when Perpetual Trust pulled the plug on Strategic on March 12, 2010. Secured debenture holders include Bank of Scotland, now part of the Lloyds group, which is owed NZ$76 million.
Strategic's unsecured creditors, including unsecured depositors' owed NZ$1.45 million and subordinated noteholders owed NZ$21.7 million, are unlikely to get back any money at all.
As part of its series of investigations into all failed finance companies, the Securities Commission said it began probing Strategic in August 2008. That's when the company, blaming tough conditions in the property market, froze repayments to investors who subsequently approved a moratorium in December 2008 that aimed to repay them 100% of their principal investments plus interest through asset realisations over five years.
Sean Hughes, CEO of the Financial Markets Authority (FMA) which replaced the Securities Commission last April, said in September the FMA was close to concluding its Strategic Finance investigation.However, there have been no developments since.
Strategic's CEO was Kerry Finnigan and its board included former New Zealand Rugby Union boss Jock Hobbs. Finnigan told interest.co.nz in August 2010 Strategic's leaders had tried their best and didn't think they'd done anything wrong.