Thousands of Kiwi mums and dads Fiji Momi development investments hit by Bridgecorp collapse

Media report this morning confirm that Finance company Bridgecorp Limited has collapsed, leaving about 18,000 mainly “mum and dad” Kiwi investors unsure of the fate of nearly $500 million they have invested with the company.

TravelMole covered the story earlier this year, please see: https://www.travelmole.com/stories/1117812.php related to Fiji’s Momi development, which also includes the new Fiji Marriott, which were all on stop.

The receivership is the biggest of its type in recent years in New Zealand and dwarfs the collapses last year of Provincial Finance, Western Bay and National Finance 2000, with Bridgecorp, and its subsidiaries placed in receviership last night at the request of its directors after after defaulting on loan repayments five days ago, breaching terms of its trust deed.

The company rasies money from the public and lends it to property developers who have generally failed to get funding from banks and there are more than 18,000 investors with term investments worth close to $600 million in New Zealand maturing continuously over the next five years and Sydney-based parent company, Bridgecorp Holdings and its finance arm Bridgecorp Finance, also have a swag of investors.

The move to call in receivers came after all-day talks yesterday between Bridgecorp and its trustee Covenant Trustee Co, with the managing director of Covenant, Graham Miller, saying the trustees had been advised last Wednesday that Bridgecorp had not repaid principal owed on term investments to debenture holders, adding, “Over the intervening days we have had several meetings with the Bridgecorp directors and the advisers and following an analysis of the circumstances of Bridgecorp, the directors requested Covenant appoint receivers”.

John Waller and Colin McCloy, partners of PricewaterhouseCoopers, have been appointed as receivers, with Mr Waller confirming last night that about $470 million invested by “mums and dads” was now frozen, adding “Obviously we feel for these people.””From our perspective we are trying to come to grips with the position as soon as we can.”

He was not able give any indication of when investors would know what would happen with their investments.

Mr Waller said Bridgecorp had assets with a valuation of $600 million but there were other creditors along with the investors.

Bridgecorp has been around as a finance company since the 1990s and was a high-profile advertiser, raising money from the public through “first-ranking debenture stock”, which typically offered higher interest rates than those available through the banks.

The money raised was generally used for property development.

Bridgecorp’s parent company, Bridgecorp Holdings, and a subsidiary, Bridgecorp Finance, are based in Australia and last year Australia’s securities watchdog, ASIC blocked Bridgecorp Finance’s attempts to raise funds in Australia, saying a probe into the prospectus offered by the finance arm had “raised significant concerns” about its financial position.

ASIC had first put the prospectus on hold after it had emerged that Bridgecorp was exposed to the collapse of Australian property developer Westpoint Corp.

The parent company and finance subsidiary in Australia are not in receivership, with Bridgecorp managing director Rod Petricevic who has been with the company since 1993 a major shareholder of the Australian parent company.  Discussions were underway last night though over the appointment of receivers for the Australia business.

Bridgecorp is run by former 1980s high flyer Rod Petricevic, a former partner of Sir Michael Fay and David Richwhite and he was chairman of public-listed investment company Euro-National before selling out in 1988.  He was subsequently embroiled in a legal row over partly-paid shares in the company.

The NZX blocked repeated efforts by Petricevic to list Bridgecrop in New Zealand so he set up head office in Australia though lived in New Zealand, with the company eventually put on the New Zealand Unlisted internet trading platform.

Trading was suspended this morning because of the defaults.

Bridgecorp’s woes over its inability to raise funds in Australia were compounded in December by the stalling of one of its major investments, a resort development at Momi, south of Nadi in Fiji following a military coup.

Building of the resort was never resumed after that even though a tax wrangle with the Fijian government over the sale of residences at the resort was sorted.

The Fijian government is owed at least $F12 million, borrowed for the resort, by a party related to Bridgecorp.

Bridgecorp has said previously that it has a $50 million exposure to Momi.

Word around the traps is that financial advisors and consultants have been pulling their clients out of Bridgecorp at an escalating rate over recent months.

The company has been trying to raise $350 million through term investments with rates as high as 10 per cent.

The receivers are setting up a website to provide information for Bridgecorp investors – the site is: www.pwc.com/nz/Bridgecorp.

Report by The Mole and Fairfax