Deposit rate news briefs

Finance company placed in admin, Rated Mortgage Bonds fall short, Provincal debenture holders to get less than previously predicted, New Vector offer.

Tuesday, 27 March 2007

Fincorp, which has about A$200 million in high-interest notes on issue, offers first-mortgage, mezzanine and bridging finance for property developments and has its own portfolio of property holdings. It is reported to have 8,000 investors.

The company has previously attracted scrutiny from the Australian Securities and Investments Commission over insufficient levels of disclosure in one of its prospectuses.

Rated Mortgage Bonds fall short
PropertyfinanceSecurities Rated Mortgage Bonds, which listed on the NZDX yesterday, raised $3.2 million.

The bond’s trustee, RMB Trustee, says that the maximum amount of the offer was $12.8 million and that "accordingly there was an under-subscription of $9.6 million."

Lower payout for Provincial investors
The receivers of Provincial Finance have scaled back, slightly, their expectations about the level of the final recovery.

When Provincial collapsed the receivers thought they were likely to recover most, if not all, of the almost $300m principal owed to 14,000 investors.

A third payment of 15c in the dollar will be made on April 5. This will bring the total payments to 50c in the dollar in the 10 months since the company fell over.

The receivers, PricewaterhouseCoopers, previously said they expected debenture holders would get their entire principal back. However, early repayments of loans means this may not eventuating.

“We are monitoring the impact the early loan repayments may have on ultimate recoveries. However, at this time we remain of the view that debenture holders should recover most of their principal over time.”

It is unlikely that any accrued interest will be recovered for debenture holders. Redeemable Preference Shareholders are unlikely to get anything.

The receivers say “their investigations have uncovered evidence of a series of alleged frauds committed against the company.”

Legal proceedings have been started against a number of parties. Legal steps have been taken to freeze assets of certain parties involved in these alleged frauds.

New Vector offer
Vector intends making a $200 million credit-wrapped bond issue to refinance the bonds maturing on 4 April 2007. The bonds will be issued for 10 years and will be credit wrapped by Ambac Assurance Corporation. Westpac Institutional Bank will lead manage the issue which will be placed solely with institutional investors.

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