Cash offer 'a simple scam'

A cash offer for Strategic Finance debentures by Marchmont Securities Trust has been labelled a "scam".

The offer of 10c for each $1 in face value of the debentures should not be taken seriously, Kapiti Coast-based financial adviser Chris Lee said.

It was possible a much more realistic offer for the debentures and Strategic book would come from one of the large remaining finance companies, he speculated.

The offer from Marchmont Securities Trust was for up to $5 million in face value of Strategic Finance debentures, according to a letter to a debenture holder, Joy van Lier of Amberley.

Acceptances would be received and processed on a "first come, first served" basis by RA Fraser & Associates, Barristers & Solicitors of Christchurch.

RA Fraser & Associates would operate a secure payment facility for debenture holders accepting the offer by sending transfers for registration after Marchmont deposited settlement funds to their trust account, the letter said.

Van Lier said she was shocked at receiving the letter on the same day she received an update from Strategic Finance Limited chairman Denis Thom, which had updated the outlook for the finance company.

The outlook for Strategic is uncertain with the finance company informing investors of a further increase in its provisions for bad loans.

The firm is already in trustee negotiations after failing to meet a payment target in its moratorium agreement on January 7.

The firm froze repayments to 15,000 investors and won approval for a managed wind-down of its loan book as an alternative to receivership last year. It owes investors about $325 million.

Van Lier said she was concerned that fellow investors could be taken in by the Marchmont letter which urged them to "sell your Strategic Debentures now" in large type.

Lee said the offer was "a simple scam ... they have simply bought or got hold of the Strategic registry. ... By law they are allowed to get hold of it. Strategic made it a condition they didn't contact clients [but Marchmont] have selected those people they believe are vulnerable to offer them a stupid amount of money for their debentures."

The Press was not able to contact RA Fraser yesterday.

- © Fairfax NZ News