Updates
19 March 2009
Korda Mentha have released their latest investor update which provides stockholders with detail on the current state of the loan recovery process and provides guidance on the extent of recovery expected.
17 December 2008
Boston Finance Limited has paid a third installment of 7.5c in the dollar bringing the total repayments to date to 21c in the dollar of principal invested. In an accompanying letter from KordaMentha (click here) have indicated that due to economic conditions they are no longer confident of either a full repayment, nor the original 20 month timeline for the moratorium. KordaMentha indicate that the next 3 - 6 months will be critical to the likely recovery of key loans in the Boston Finance loan book.
We are currently working with Aegis to process the payment, we expect the payment to reach your accounts this week.
11 September 2008
Boston Finance Limited has alerted us that the second instalment of the repayment plan due yesterday will be 3.46c instead of the projected 28c in the moratorium document. KordaMentha have written a letter outlining the position click here to view
10 June 2008
Boston Finance Limited has made the first quarterly partial repayment of principal to you as required by the terms of the moratorium entered into on 14 March 2008. This payment is of capital only so there is no tax liability to consider. This initial payment represents 10.4c in the dollar, slightly less than the 13c forecast in KordaMentha’s moratorium report.
While the rate of repayment of loans has been slightly slower than predicted please note that Boston Finance have assured Vestar that the shortfall is not due to a write down of the loans in question. When the moratorium was proposed Boston Finance and KordaMentha worked out the payment schedule as best as possible to reflect the anticipated repayment schedule. While in this case repayments have been slower than expected any imbalances will be picked up in the later payments scheduled throughout the moratorium period.
Notwithstanding this, loans that have been repaid to date have been paid in full and, based on information currently available, KordaMentha is still forecasting full repayment within the term of the moratorium. Please read the enclosed letter from KordaMentha regarding the Boston Finance moratorium.
The next distribution of principal will be made to your account on the 10thSeptember 2008.
Background
Boston Finance Limited (previously MFS Boston) announced on 26 February 2008 that it was seeking Stockholder approval to enter a moratorium arrangement as a proactive and prudent measure for all Stockholders. For a copy of the letter, dated 25 February 2008, from the Directors of Boston Finance, please click here.
At the Stockholder meeting on 14 March 2008 investors voted strongly in favour of the moratorium. 77% of the Stockholder value was represented at the meeting, with over 99% of the vote in favour.
The Trustee, Perpetual Trust, said the company’s decision to seek a structured moratorium was an appropriate action to take in the circumstances and was pleased with the level of support shown by investors for the moratorium.
The Directors of Boston Finance have stated their continued confidence that the loan book is of a high quality, and that based upon the information currently available to them, Stockholders should be repaid all of their principal over the proposed moratorium period of 20 months, together with interest at a rate of 9% pa. The Directors’ conclusions are supported by a report that has been provided by advisory firm KordaMentha.
The cashflow summary prepared by KordaMentha indicates that investors should have their capital repaid in the following instalments (per $1 debenture):
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Quarter ending 31 May 2008 13c
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Quarter ending 31 Aug 2008 28c
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Quarter ending 30 Nov 2008 36c
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Quarter ending 28 Feb 2009 15c
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Quarter ending 31 May 2009 8c
Vestar sees the approved moratorium as a positive step for all Boston Finance Stockholders. One of the most favourable aspects of the moratorium is that the Directors, through independent reviewer Korda Mentha have been able to provide a detailed schedule of payments, with 77% of investors capital due to be repaid by December 2008.
A letter from the Boston Directors regarding the outcome of the Extraordinary General Meeting was forwarded to clients on March 19 2008.
