Bridgecorp collapse spreads to Australia

The Dominion Post says that the Bridgecorp collapse has spread across the Tasman, with the company’s main Australian operating arm being put into receivership, owing investors A$24 million (NZ$26.3 million), while other companies went into voluntary administration.

The company was the developer of the massive Momi tourism development near Nadi in Fiji, which included a new Marriott hotel

It was confirmed last night that Andrew Love and Brian Silvia, of Ferrier Hodgson, had been appointed as receivers to Bridgecorp Finance and a spokesman said he understood the debt was owed to about 1000 Australian investors holding both debentures and unsecured notes.

In addition, Phil Carter and Stephen Longley of PricewaterhouseCoopers in Australia were appointed as voluntary administrators to nine Bridgecorp companies.

These included Bridgecorp Finance as well, along with the ultimate parent company of Bridgecorp, Australian registered Bridgecorp Holdings.

The first meeting of Australian creditors will be next Wednesday.

The receiverships of the New Zealand arms of Bridgecorp are being conducted by John Waller and Colin McCloy, partners of PricewaterhouseCoopers in New Zealand, with the main New Zealand subsidiary, Bridgecorp Limited, owes about $500 million to 18,000 Kiwi investors.

Bridgecorp Finance hit the news early last year, when ASIC blocked its prospectus in February, then had court orders taken out in August, which barred the company from raising any more money from the Australian public.

ASIC said that surveillance of Bridgecorp Finance’s prospectus had “raised significant concerns” about its financial position, with the concerns centred around the finance company’s exposure to the collapse last year of Australian group Westpoint.

After it was blocked from raising money across the Tasman, Bridgecorp supported its businesses in Australia by selling some mortgages to its New Zealand arm.

Meanwhile, international ratings agency Standard & Poor’s is warning that the Bridgecorp collapse could have spill-over effects on New Zealand’s “extraordinarily large number” of finance companies.

S&P’s director, corporate and government ratings, Gavin Gunning said Bridgecorp highlighted the need for the strengthened regulations in the non-bank deposit-taking (NBDT) sector – which the Government announced last month.

A wide range of measures were revealed, including the need, subject to Cabinet sign-off late this year, for all NBDTs to have a credit rating.

“The failure of Bridgecorp during favourable macroeconomic times highlights the need for the NBDT sector to get its house in order before the next economic and property cycle,” Mr Gunning said.

S&P said it believed it could add value by assigning its ratings. There were some sound companies in the New Zealand NBDT sector that investors could have confidence in.

The “greatest sensitivity” affecting the NBDT sector in the short term was the potential effect of the Bridgecorp collapse on the funding bases of the retail debenture-issuing finance companies.

Report by The Mole