7 December 2008
Further to the below the value of Capital + Merchant Debenture Stock has been revalued by Aegis to 1c in the dollar. GWM is actively seeking answers from the receivers particularly in relation to comments that there are avenues for litigation that can be explored.
21 November 2008
KordaMentha who are the second receivers for Capital + Merchant have released a statment indicating that they can not see the liklihood of any recovery for debenture holders. GWM are attempting to find out more information as to the basis of the statement.
Please click here for the full KordaMentha statement
Please click here for a Q&A sheet provided by KordaMentha
28 July 2008
Grant Thornton, acting as first receivers for Capital + Merchant Finance, have updated their recovery forecast and say that the finance company’s debenture holders are now likely to receive a recovery of only 8% at best of their investment, compared with an original estimate of 14% to 59% long term. When combined with the expected full recovery for Fortress, who appointed the receivers under their priority charge, the overall forecast recovery comes out at 18%.
In their six-monthly report on the state of affairs of the failed finance company, the receivers also say they are concerned about the appropriateness of a number of transactions and the activities and conduct of the company, the officers of the company and third parties leading up to the appointment of receivers. The Receivers are continuing to investigate these along with agencies such as the Securities Commission.
Gross recoveries of $42.8 million have so far been realised from 55 loans with a total book value of $182.6 million. Of this amount, $13.4 million has been repaid to Fortress, the balance having been paid to prior ranking security holders or applied to the costs of running the receivership.
The receivers say further sales and settlements are pending, but realisation of the loan portfolio will be a complex and time-consuming process.
11 July 2008
Aegis have re-valued both the Capital Secured & Investment Debenture assets of Capital + Merchant to $0.10 cents from Monday 9thof June. The official receiver statement dated 28 May 2008 indicates that recoveries "may be as low as under 10 cents in the dollar. This excludes any recoveries obtained under the insurance cover (if such available)."
The statement also notes "There are significant concerns that the securitisation undertaken by the Company may have invalidated the insurance on a substantial portion of the company's loan book."
The above has caused considerable concern because the Lloyds insurance formed a significant part of our assessment of Capital + Merchant as a suitable investment for Clients.
Last year, following the collapse of Bridgecorp we took action to ascertain the strength of other finance companies where Clients funds were invested. This included a series of meetings with Finance company representatives and culminated in a nationwide tour of seminars which many of you attended.
In regard to Capital + Merchant we have received continual assurance that the insurances held were in place and valid. In fact the insurance broker representing Lloyds attended an Adviser meeting expressly for that purpose. Owen Tallentire stood in front of many of you and told you the same thing. Further to that on 25 October 2007 we received a statement from Capital + Merchant stating that they now had improved their insurance policy to 100% of all loans.
In response to the receivers report we have written a letter to the Trustee (Perpetual Trust) demanding answers as to how such a critical component of the investment could have been allowed to be invalidated.
The reason given by KordaMentha (the securitisation of loans) is specifically discussed in the Capital + Merchant Investment Prospectus whichwas approved by the Trustee and the Securities Commission. We have had no formal response however Gould’s representatives are meeting Perpetual Trust this week to discuss the matter further.
