Statutory Managers hopeful of Aorangi return

Statutory Managers are hopeful of a return to Aorangi investors

Investors in Aorangi Securities Ltd (Aorangi) could receive an initial capital repayment of up to three cents in the dollar later this month, subject to interest payments being received and other monies collected by Aorangi to the end of 30 September 2010, according to the statutory managers’ third report to investors.

In their report, Richard Simpson, Trevor Thornton and Graeme McGlinn of Grant Thornton New Zealand, with the help of Mr Hubbard have identified a number of assets that may be sold in the short to medium term.

In the longer term they were also hopeful of distributing up to a further 20 cents in the dollar to Aorangi investors by the middle of 2011, if they are able to sell these assets at expected values.

Mr Simpson says “We will not be undertaking a “fire sale” and will only sell if it is in the best interests of the investors and Aorangi.

“While the exact amount of the October capital payment to Aorangi investors cannot yet be confirmed, it is pleasing to note that Te Tua Charitable Trust will be able to make a payment of $600,000 to Aorangi,” he said.

“We have had initial draft valuation reports on the assets that Aorangi owns or has security over. The specific impact of these valuations on Aorangi is being assessed. Until this assessment is completed we will not be able to provide an assessment of the likely estimated returns to investors” Mr Simpson said.

The assessment of the Aorangi investment portfolio requires further loan and property value review work. Possible losses from Southbury and Te Tua could total $25 million. Whether Aorangi investors will recover all their investment will depend on the loan and asset sale process, and the ultimate level of money Mr Hubbard has in Aorangi.

“Finalising the distributions could take a number of years,” says Mr Simpson.

The timing of payments for Hubbard Management Funds (HMF) investors is still unclear.

The statutory managers said that while the HMF share portfolio had performed positively over the last few months, the recent receivership of South Canterbury Finance has had an equally adverse effect on value.

Mr Simpson states “We have appointed a reputable firm of independent investment advisers and sharebrokers to provide investment advice and assistance in managing the share portfolio of HMF.

“We have been advised that the portfolio appears to have been constructed on a high risk – high return philosophy and until we are able to sell certain investments there is a risk of loss.

“Presently 24% of the current portfolio value is in unlisted entities, Australia-listed investments outside the ASX200 represent almost 24% of the portfolio with a large percentage of the listed portfolio made up of smaller listed company investments which may be difficult to sell because of limited demand. Approximately 32% of the portfolio is invested in resource and exploration companies.”

Mr Simpson said that there are important legal questions to be considered as the statutory managers, along with their professional investment advisers, develop strategies to ensure that HMF is carefully wound up in a manner which will maximise the returns to investors whilst reducing the risk in the portfolio.

“The nature of the fund is not clear and although investors may consider they had an individualised portfolio, features of the underlying management of the fund suggest investors’ funds were pooled.

“We are likely to be seeking the guidance of the Court as to the nature of HMF and the appropriate method for the ultimate distribution of the sale proceeds of HMF assets to investors. This entails a large amount of preparatory and ongoing work by us and our legal team and the subsequent Court process is likely to take some time. The costs of this will be significant and we will attempt to find other options.”

“There are still many issues to work through and we will have a further progress report to the investors at the end of October 2010,” Mr Simpson said.

No further comment will be provided.

ENDS

Third_Statutory_Managers_Report_30_Sept_2010.pdf

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