Statutory Managers release fifth Hubbard Report

Press release

26 November 2010

Statutory Managers release fifth Hubbard Report

Tardy interest payments by Aorangi Securities’ borrowers continues to slow progress for the statutory managers with a total of $5 million still outstanding

In their fifth report on the statutory management of Aorangi Securities, Hubbard Management Funds, Mr and Mrs Hubbard and associated charitable trusts, statutory managers Richard Simpson, Trevor Thornton and Graeme McGlinn, of Grant Thornton New Zealand Ltd, said that the September cash collection is still $2 million less than expected and that there had been little improvement in the collection of arrears of $3 million.

“Requests will go out shortly for payments due on 31 December and we are guardedly hopeful that the level of collection will be greater this quarter. With dairy cash flow expected to be stronger over the next six months, we anticipate both better returns and a payment of arrears,” the managers said.

The statutory managers said that a key focus over the last month has been the on-going analysis of the Aorangi business, which they have divided into three categories:

•Category One includes 31 mortgage loans with a value at August 2010 of $59 million

•Category Two includes 15 direct investments by Aorangi valued at $47 million. These are made up of 12 farm loans, two commercial property investments and $10 million in Southbury Group Limited, which is unlikely to be recovered because of its receivership.

•Category Three is a loan to Te Tua Charitable Trust of approximately $24 million.

“Aorangi’s ability to recover full repayment or realisation of investments is significantly reduced because of the level of overall indebtedness. Only one in five borrowers is paying any interest on their loans to Aorangi,” they said.

October was a good month for Hubbard Management Funds with a value of $56 million.

“The nature of the portfolio has lead to significant fluctuations in value. Some of the movements in value experienced have been as much as $1 million in a day.”

Much of this last month has been spent working towards the ultimate distribution of assets. This has centred on a court application to confirm the actions being contemplated to manage the fund in the interests of the investors.

“We are seeking court confirmation that will allow us to manage and maintain the portfolio and to make new investments to protect and enhance the investor’s position.

“We hope to file a second and more far-reaching application with the courts by 31 March next year. This is an important part of the process which will determine the entitlement of investors to the assets of the fund and will determine how we distribute those assets to the investors. As part of this process we will need to keep investors formally informed throughout,” they said.

No further comment will be provided.

ENDS

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