Secured investors of failed New Zealand property lender Bridgecorp Limited (Bridgecorp) may receive as little as 25 per cent of their money back.
Bridgecorp's receivers John Waller and Colin McCloy from PricewaterhouseCoopers have told investors that secured debenture note holders could recover between 25 per cent and 74 per cent of their original investment.
"The wide range reflects the fact that Bridgecorp has loans and accounts receivable totaling $NZ157.1 million on a number of offshore developments," Waller and McCloy said in a letter to investors this week.
The group's major asset is a portfolio of 69 loans with a value of $NZ393 million involving Kiwi, Australian, Fijian and other borrowers.
Most of these are developments, some yet to be completed and secured by low-ranking second or third ranking mortgages.
"The practical effect of this is that often when loans are in default, the receivers are unable to enforce security on the loans without the prior ranking mortgagees," the receivers said.
"This limits the options open to the receivers in attempting to recover individual loans."
Part of the problem is that the better quality loans, which total $106 million, have been sold to other financiers to generate cash flow for interest payments to Bridgecorp investors.
The company had offered returns of up to 12.5 per cent to retail investors and then onsold these loans to developers at a higher interest rate.
"We are working with a number of stakeholders to recover these loans. However, it is clear that this will be a complex, costly and time-consuming exercise," the receivers said.
Receivers have also taken control of the Australian fundraising arm of the group, Bridgecorp Finance Limited.
The company owes $24 million to about 1000 Australian debenture note holders.
Most of this is tied up with former Australian fast bowler Craig McDermott who owes the embattled company more than $18 million in property loans.
The corporate regulator ASIC stopped Bridgecorp from raising more funds last year following its exposure to Westpoint.
