Threepwood’s Boult says not my problem’ as Mascot folds


Veteran Wakatipu businessman Jim Boult doesn’t seek attention, but it’s certainly found him.

Taxpayers look set under the Government’s retail deposit guarantee scheme to bail out Mascot Finance, now in receivership. Hindsight hounds have diverged on to Boult’s scent.

“It’s nothing to do with me – if they’re in trouble it’s their problem,” Boult tells Bizscene after print and internet outlets highlighted a Mascot second mortgage over Boult’s Threepwood property at Lake Hayes.

Boult says he hasn’t defaulted on payment either to Mascot or first mortgage holder Westpac NZ, and a source reckons pre-sales cover purchase and development.

“There will be no loss, and I will bank a substantial profit out of it,” Boult explains to BizScene.

His philosophy is there are no lousy decisions in property, only timing decisions.

“Ultimately, property always comes right, even in a market like we’ve got at present.”

Boult’s Threepwood project is three-fifths sold, with the last deal about a fortnight ago. Threepwood contains
42 lots of up to 1.2ha.

It has “gated” security and common facilities such as a lake walking track and a children’s playing area.

Factors besides Westpac remaining staunch now include whether the Mascot receiver has any responsibility to do the best for taxpayers – the guarantors. This is new commercial territory.

In the meantime, Boult describes the Threepwood relationship with Westpac as excellent.

One source suggested a troubled Christchurch apartment development contributed to Mascot’s receivership. The source was referring to the Parkridge Apartments, on which Mascot had a second mortgage.

The 19 units were to sell for $1 million to $3 million each. Inland Revenue put the apartments company into liquidation in July. Sharon Bartlett, one of the owners, put Queenstown Property Holding, owner of shops and apartments in the resort, into voluntary liquidation the same month.

Brian Kreft, Mascot’s chairman, tells BizScene none of the finance company’s major investments had defaulted.
Its largest loan was one of many factors in the receivership decision, but directors took into account more the state of the property market generally, “and also obviously in Queenstown where we had an exposure”.

Regardless, a storm is brewing about how Mascot qualified for guarantee so shortly before receivership.

Kreft says NZ financial conditions deteriorated faster close to Christmas. Properties sold under independent valuations. Borrowers struggled to get re-finance from banks. Many couldn’t repay Mascot on time, squeezing its cash flow.

Mascot’s problems arose when it looked at issuing a new prospectus after obtaining the guarantee, Kreft says.

“I don’t think many finance companies that pull the pin have got no related party transactions, audited finance statements, creditors all paid up to date, and still have $7m in the bank.”

Mascot issued a prospectus every six months. It registered the last in June.

In its last filed result, for the March 31 2008 year, Mascot reported a pre-tax loss of $11.23 million. A tax credit reduced the final result to a loss of $7.46m.

The main factor was a jump in impairment loans and advances from $365,000 to $26m. Mascot had $9.9m in cash at balance date. Shareholders’ equity remained about $9m.

Mascot announced its March year loss in June and in September said it was not taking in further deposits and would pay out investments as they fell due. The guarantee was signed on January 12. The Treasury has confirmed that Mascot’s 2550 investors will get all of their $70m in deposits.

Kreft describes the process for acceptance into the guarantee scheme as “very rigorous”. The Labour coalition
introduced the scheme during last year’s election campaign, and National backed it.

On Threepwood, one issue raised is whether Boult and Mascot directors Kreft and David Stock could be classed as related parties. If true, this might complicate the guarantee.

Boult describes this as “ancient history”. The three were Shotover Jet directors together, until eight years ago.
Boult, 35 years in business and acting executive director of Christchurch Airport, has worked with scores of business people in the small national pool, as Kreft and Stock have.

Kreft, who owns and runs an investment banking firm in Christchurch, was originally a Dunedin sharebroker. He helped float such tourism firms as Helicopter Line and the Christchurch gondola company.

He chairs Les Mills International and Christchurch broker Hamilton Hindin Greene.

In recent years some controversy has followed Stock, a well-known Christchurch commercial lawyer and former member of the Securities Commission. He is a former chairman

of Government-owned Solid Energy and Christchurch City Holdings, the city council arm that controls lines company Orion and other city-owned enterprises.

In 2002, Justice Willy Young criticised Stock for having “a credibility problem” and for repeatedly making “untrue” statements during a court dispute between meat companies PPCS and Richmond.

The Canterbury District Law Society fined Stock in 2007. He admitted acting for both his long-term mistress and her husband (who was unaware of the affair) in a deal in which the husband relinquished his interest in the family home.

Stock accepted he was guilty of serious misconduct for failing to alert the husband to the conflict of interest before he witnessed the deal.

Dorchester Finance

Stock Exchange-listed Dorchester Finance has taken a hands-on approach with two Queenstown properties on which it lent money.

It has bought the 77-room Gold Ridge Hotel on Frankton Road and taken equity in the Frankton Arm Tavern.

Dorchester, which has been under pressure itself, paid $8m to buy the Gold Ridge, on which it had a secured, outstanding loan of $6m. Penny Clark will run it and advise the company on its other accommodation interests.

Executive director Paul Byrnes tells BizScene Dorchester has reduced its exposure to Queenstown from an initial $30m.

Kingston Flyer

Dan McEwan’s bankruptcy is unlikely to block the sale of the Kingston Flyer.

McEwan owned less than 50 per cent of Kingston Acquisitions. This owns the train, tracks and Kingston and Fairlight land parcels. It leases out the cafe and train.

The Official Assignee will doubtless be keen to proceed with sale. It is understood discussions continue.

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