Storm clouds gather on Aorangi Securities

Storm clouds gather on Aorangi Securities

by Paul McBeth

July 1 (BusinessDesk) – Investors in failed Allan Hubbard investment vehicle Aorangi Securities Ltd. will get a smaller distribution than expected this month, as the Serious Fraud Office alleges the business reported “non-existent” assets.

A report from Aorgani’s statutory managers report was published shortly after the Timaru Herald reported on court documents in which the SFO alleged Aorangi made claims over non-existent investments.

Some 400 people owed $96 million will get 8 cents in the dollar in July, contingent on statutory managers Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton closing a $10 million farm sale.

The 8% return is down from the previous 10% return flagged in a March report. Still, statutory managers Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton said they expect to realise $20 million from sales over the coming three months taking the total amount recovered to $40 million.

They expect to claw back more than the $87 million to $97 million range previously forecast, though it will be a long wait for investors.

The status of $60 million of assets pledged to Aorangi by Hubbard earlier this year is uncertain, and will hold up any further distributions until it’s resolved.

“Investors will have a long wait for repayment on investments because assets purported to have been transferred to Aorangi may still be owned by Mr and Mrs Hubbard,” they said.

If the Hubbards still own the assets, Aorangi investors would have to make a claim as a lender, and would rank alongside other creditors of the Timaru couple.

The SFO charged Hubbard with 50 counts of fraud in relation to Aorangi and Hubbard Managed Funds. Hubbard’s wife Jean escaped prosecution.

The statutory managers said the total administration of Aorangi, Te Tua Charitable Trust and HMF was $4.9 million, made up of $2.87 million to Grant Thornton, $1.15 million in legal fees, $276,000 in other disbursements and $609,000 in goods and services tax.

They asked the courts for direction as to who should pay those costs, and were told the costs were “neither the liability of the statutory managers or the government, and that it should come from Mr and Mrs Hubbard’s personal assets,” they said.

The value of Te Tua Charitable Trust’s net loan book improved slightly to $8.8 million as at May 31, up from $8.7 million in the previous report.

The investment fund, HMF, was relatively stable in the period, though gains were offset by a reduction in the value of investments in Olympus Pacific and Scales Corp., the managers said.

Investors face a shortfall of some $31 million, and won’t get a distribution until the court directs how that deficit should be allocated.

Hubbard’s interests were frozen by Commerce Minister Simon Power in June last year after an anonymous complaint was made to the Securities Commission by an investor claiming they had never been shown a prospectus.

(BusinessDesk) 17:51:07

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