Mums and Dad’s failed Bridgeport Investors given a ‘kick in the teeth’

A report in The Dominion Post says that thousands of Kiwi Mums and Dad’s investors owed $460 million by the collapsed Bridgecorp finance company will have to wait at least six months to see any money – and may receive just a quarter of their funds, funds having been invested in leisure developments including the failed Momi project in Fiji, which incprporated the new Marriott Hotel and Resort.

Receivers appointed in July to probe the group’s collapse had grim news yesterday for the 14,500 secured debenture holders – mainly “mum and dad” investors.

John Waller and Colin McCloy, partners of PricewaterhouseCoopers, also said they had “identified a number of matters” that could give rise to breaches of the Securities Act and would be referred to the Securities Commission.

The commission watches over matters such as the prospectuses companies use to raise funds from the public. “We realise this will come as a shock to investors and the outcome obviously is disappointing,” Mr McCloy said.

He would not give any time frame for payments – but said it was unlikely any money would be paid back for at least six months. In the worst scenario investors might get as little as 25 cents in the dollar; in the best it might be about 74 cents.

That estimate of 25c to 74c is lower than for two finance companies put into receivership last year.

Provincial Finance debenture holders may get 90c to 95c in the dollar back, and investors in Tauranga’s Western Bay Finance, 75c in the dollar.

Secured investors in National Finance, also in receivership, have been told they may get 45c in the dollar.

Investors were struggling last night to digest the news of a potentially low payout. Shirley and Neville Field, of Cromwell, had about $26,000 with Bridgecorp.

“It is a kick in the teeth, but if that is all we are going to get then that’s it,” Mrs Field said.

The couple also had money with Provincial Finance, which owed investors $300 million when it collapsed.

“I’ve had a gutsful of finance companies,” Mrs Field said.

Ann Clarke, of Napier, was a week away from getting her $40,000 in Bridgecorp back when the company went into receivership.

“I’m hoping I’ll get 74 cents (in the dollar) but I won’t be happy if I get 25c,” she said.

Bridgecorp operated on both sides of the Tasman, raising funds from mainly “mum and dad” investors to finance property projects.

It struck problems last year when it was blocked from raising any more funds from the public in Australia.

The problems were compounded when the Momi resort development in Fiji was disrupted by the December coup.

A report from the receivers to investors says the company has $393 million lent to 69 parties in New Zealand, Fiji and Australia.

The receivers say that parts of the loan book were previously sold to other financiers to pay for principal and interest payments to Bridgecorp’s investors, with this leaving a loan book “which is more difficult to recover”.

They have split the loan book into $157 million of Australian and Fijian loans and the rest in New Zealand.

They estimate 25c to 40c in the dollar could be recovered from the New Zealand loans.

If all the overseas loans were recovered, and put with a possible 40c from the New Zealand loans, this would give a potential total payout of 74c in the dollar.

Report by The Mole