Just when you thought the finance company dive had bottomed, it falls further – about $4.5 billion from 130,000 investors is either tied up or lost and Queenstown figures on both the investing and borrowing sides.
Hanover Group, the biggest collapse, has tied up more than half a billion dollars from 17,000 investors. Reaction at meetings of Hanover Finance, the key member of the group, suggests investors will approve a debt-restructuring plan.
Roughly, this will repay secured investors by the end of 2013 and, if sufficient money remains, half of unsecured investors’ and bondholders’ principal.
Analysts such as Brian Gaynor have zeroed in on related-party loans by Hanover Finance. These amounted
to $85.4 million at June 30.
A high proportion were to other companies owned by Eric Watson and Mark Hotchin and much of the money was in Jack’s Point development lots.
Watson and Hotchin own Hanover Group 50:50.
Queenstown loans made up 34 per cent of Hanover Finance’s total portfolio at June 30, when 31 per cent of the portfolio was in default.
PriceWaterhouseCooper’s independent report for the Hanover Finance restructuring plan says the property market downturn has been particularly noticeable in Queenstown in the past six to 12 months.
As a mezzanine lender Hanover Finance, typically charging 14-20 per cent interest, relied on borrowers making repayments at milestones. Many borrowers have been unable to obtain refinancing to repay, however.
Meanwhile, Queenstowners figure among forgotten Vestar investors.
Vestar was strong in the Wakatipu. On its demise, Gould Wealth Management and Forsyth Barr took over most Otago-Southland customers.
However, they left behind those who were in Vestar Star Invest, the low-cost service. Star Invest supplied an administrative service but didn’t charge adviser fees.
Star Invest customers in the North Island complained to the NZ Herald that since Vestar received commission fees on customers’ investments, some information or advice should still be provided. Fat chance.
Queenstown’s three taxi companies, already feeling the pressure as Wanaka’s Wan-A-Cab moves in, may face still more competition.
Green Cabs, the national firm that uses Toyota Prius series three hybrid vehicles, still has Queenstown on its radar. Two months ago it told BizScene it planned to be in Queenstown and Dunedin by Christmas.
Dave Jordan, one of the three managing directors, says entry has been delayed by problems buying Prius vehicles.
“We’re on back order until the end of February.”
Jordan says Green Cabs may import used Prius series three cars, up to three years old, from Japan – “if we can get our hands on them”.
It may base as many as 10-12 cars each in Queenstown and Dunedin, but Jordan was unable to give a start date.
Green Cabs runs about 50 Prius taxis in Wellington, about 45 in Auckland, and about 15 in
Christchurch. They are kept busy in Auckland and Wellington, and less so in Christchurch, where another firm operates Prius taxis, though Jordan points out these are series one and two.
The company says it’s popular with students and other young people at weekends, and on weekdays benefits from government departments and big firms seeking green-compliant kilometres for carbon-reduction programmes.