St Laurence staves off threat of receivers
St Laurence, the finance company that went into moratorium last year, has staved off the threat of receivers after additional loan provisioning sparked its trustee, Perpetual Trust, to review its position.
Thursday, November 5th 2009, 4:58PM
by Paul McBeth
St Laurence has agreed to a set of key performance indicators for its financial performance, including the stipulation that the finance company continues to achieve the rate of return on its assets and maintain sufficient cash to fully repay its class A debentures due prior to November 30 2013, managing director Kevin Podmore said in a letter to investors.
"We calculated we need an 11% return on assets to meet all of our obligations in full," Podmore told Good Returns. "If we had plugged in the numbers and they had come out at 25%, well, that would be too high."
Podmore said times are challenging and he could not be confident the company will meet its KPIs. He said the targets are achievable and the company will focus on meeting its short and medium-term debts as they fall due.
"Now we can focus on one thing - generating returns for our investors," he said. "In some ways, I think companies in moratorium have it a little bit easier than those that aren't - they have to fight to keep their head above water and meet criteria for the government's guarantee."
St Laurence must also avoid further material losses between now and this time, otherwise Perpetual can, and if necessary will, appoint a receiver if it believes doing so is in the best interests of investors.
The finance company has slashed its staff by about 50%, is looking to sub-lease some of its office accommodation in Wellington and has shut down its Australian office as it looks to cut back on costs.
Some 9,000 investors in St Laurence owed $250 million in frozen funds agreed to give the company until 2013 to repay 70% of its debentures. The other 30% of debenture holders are due to be repaid by 2021 and capital note holders by 2034.
Paul is a staff writer for Good Returns based in Wellington.
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