Fourth-fifths of Aorangi borrowers aren’t paying interest
Fourth-fifths of Aorangi borrowers aren’t making interest payments
By Paul McBeth
Nov. 26 (BusinessDesk) – Four-fifths of borrowers of Allan Hubbard’s Aorangi Securities Ltd. aren’t making interest payments on their loans and the firm’s cash collection is behind target, say the statutory managers.
The fifth report from Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton says Aorangi’s September cash collection was $2 million below expectations with little improvement in the recovery of $3 million of payments in arrears.
“Aorangi’s ability to recover full repayment or realisation of investments is significantly reduced because of the level of overall indebtedness,” they said. “Only one in five borrowers is paying any interest on their loans to Aorangi.”
The managers are expecting substantial write-downs in the company, which holds assets with a book value of $130 million.
Hubbard had planned to dispose of Aorangi’s assets over three or four years, but the managers said putting a large number of farms to market at once could weigh on the price. They’ve commissioned independent valuations of the major underlying assets.
Hubbard’s interests were frozen by Commerce Minister Simon Power in June after an anonymous complaint that an investor put money in Aorangi Securities without being shown a prospectus. Since then, the Serious Fraud Office has begun a separate investigation into the funds.
Some 400 investors in Aorangi owed about $96 million were paid $1.1 million, or 1.1 cents in the dollar.
The statutory managers were more upbeat about Aorangi’s exposure to dairy farming.
“Dairy cash flow is expected to be stronger over the next six months, so we anticipate some arrears to be paid during this period,” they said.
Hubbard Management Funds, another of the businesses under statutory management, was valued at about $56 million after prior charges as at Oct. 31, up $6 million from a month earlier, the report said. Still, the nature of the portfolio meant it faced “significant fluctuations.”
They said they are working to reduce the instability, and are taking a long term approach to realising the fund, which owes investors about $82 million.
The next report is due at the end of February.
(BusinessDesk)