Bank part-funds trust’s big divvy


Central Lakes subsidiary borrows for payout

It was the $4 million dividend that papered over Central Lakes Trust’s poor investment returns – but half was borrowed.

Revealing last month that CLT was staring at $19m unrealised losses in plunging sharemarkets, Mountain Scene also reported paltry returns of $327,000 from the community trust’s $153m external investment portfolio for its March 2008 financial year.

The $4m from power sub­sidiary Pioneer Generation saved the day – but now even that has turned cloudy.

Detailed financials not released with CLT’s annual report show that in the same year Pioneer paid out its big dividend, the CLT subsidiary also borrowed an extra $2m.

Pioneer’s indebtedness to BNZ rose from $19m to $21m.

A senior businessman tells Mountain Scene borrowing to pay dividends is frowned upon – it’s virtually a no-no.
CLT chairman Duncan Butcher sees it differently, however.

“It’s semantics whether the money [Pioneer] borrowed went completely to the trust … or went directly to paying wages or paying anything else.”

And: “It’s bullshit because [Pioneer] might have borrowed that money to do something else, to carry on and do [other power projects].”

Finally: “I don’t know why they borrowed the $2m.”

Pioneer wasn’t pressured, Butcher says – the subsidiary’s directors were happy their company could stand last year’s $4m payout and happy, hopefully, for the same amount next year.

Well, er, not completely happy, Butcher admits.

Pioneer and CLT “agreed” the $4m “at the beginning of [last financial] year”.

But: “They’ve identified to us this year that, hey, we may not be able to pay that dividend that we paid last year.”

Pioneer, says Butcher, “flagged to us that it was a bit bloody tight last year so [they’ve] just gotta be careful next year”.

CLT is a major donor to Wakatipu community projects – it put $2m into Frankton’s new Alpine Aqualand, for example.

Chairman Butcher is ratty over Mountain Scene’s earlier coverage of the $19m unrealised sharemarket losses: “[The story’s] all bullshit.”

And he’s not much happier with this week’s interview: “Bullshit, why don’t you go and write a story about the bloody baby show or something?”

Butcher is a former Cromwell mayor and Otago Regional Council chairman, and current ORC councillor.