Guardian Trust taking over Compass Capital

One Bridgecorp company that escaped receivership is Compass Capital. Jenny Ruth finds out what's happening with the company.

Thursday, 12 July 2007

by Jenny Ruth

Effectively, the idea was that Bridgecorp would sell Compass as many of its better quality loans as it could, thus providing Bridgecorp with liquidity. The by-product of that was that every loan sold to Compass meant the quality of Bridgecorp's remaining loan book was diminished.

Compass's current prospectus, last updated on May 1, seeks up to $100 million from the public.

Compass can only lend up to two-thirds of the valuation of a property development, a maximum of $3.5 million on any one loan and a maximum of $3.5 million to any individual borrower.

Its prospectus provides accounts only to August 31 when Compass had $12.6 million in loans, $3.5 million with first mortgage security and $9.1 million with second mortgage security. It had raised $14.4 million in secured and subordinated bonds by that date.

Compass also had a Lloyd's of London insurance policy that covers 100% of the principal of all loans up to $3.5 million each, although again, a maximum of $20 million can be paid out in any one year.

Compass trustee, The New Zealand Guardian Trust Company, confirms that Compass is not likely to go into receivership. Bryan Connor, general manager of corporate trusts at Guardian Trust, says his company is in the process of taking over the administration of Compass's loan book and that, in the meantime, the accounting and registry functions will be undertaken by Bridgecorp Ltd's receivers.

The prospectus will be amended accordingly, Connor says.

Connor says he can't release any more up to date information on the state of Compass's financial affairs, including the size of its debenture book or the total amount of loans it has bought from Bridgecorp.

"At this stage, that information isn't available," Connor says.

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