Irongate shares fall as Bluestone quits quest for contracts

Irongate shares slump as Bluestone quits quest for management contracts

By Paul McBeth

Feb. 8 (BusinessDesk) – Shares of Irongate Property Ltd. slumped back to a record-low after Australia’s Bluestone Group abandoned efforts to buy two management contracts from the St Laurence-linked firm.

Bluestone, which provided Irongate with a $45 million credit line last year so it could avoid defaulting on bond payments, has quit talks with the receivers of failed lender St Laurence to buy the two contracts. Bluestone’s New Zealand head Steve Martinelli confirmed the firm is “no longer engaged in discussions to take over the relevant management contracts.”

Irongate shares, which trade on the Unlisted platform, fell 1.5 cents to 1 cent apiece, matching their record-low on Dec. 16. That values the company at $1.5 million, almost a tenth of the $13.9 million market capitalisation a year ago.

Bluestone’s decision to walk away won’t have a bearing on the credit facility, which Irongate negotiated in July last year to refinance its listed bonds.

Irongate has $50 million worth of NZDX-listed bonds maturing on May 15, paying annual rates of 9.25%. The bonds have been selling at a discount this year, with current offers to buy the securities at 68 cents in the dollar.

In December, Irongate trustee Perpetual Trust declined to grant a waiver for two breaches of the property manager’s trust deed. Irongate had until the end of January to strengthen its position after it flagged a May repayment of $50 million worth of bonds as uncertain.

The Irongate and National Property Trust managers were excluded from the St Laurence receivership, though the NPT contract was later sold when investors in the listed property entity successfully lobbied for an internal manager.

Some 9,400 St Laurence investors were due to get a 9-cents-in-the-dollar repayment last month, though the receivers still expect total recoveries to be between 15% and 22% of the principal.

St Laurence was sent to the receivers owing some $212 million plus interest after then-chief executive Kevin Podmore went against the trustee’s wishes by making an offer to debenture holders to swap their debt for equity in a new company that would hold the remaining assets.

Podmore didn’t respond to BusinessDesk inquiries. A spokesman for receivers Barry Jordan and David Vance of Deloitte said they wouldn’t be available to comment until Friday pending a meeting with the trustee.

(BusinessDesk)

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