Strategic investors left in doubt

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Strategic Finance investors are facing uncertainty about an expected initial payment from the company due in less than four weeks, with the company's future also in doubt.

Debenture holders were due to receive a first repayment of about 3.4c in the dollar by January 7, about a year after the company went into moratorium.

Yesterday Strategic chairman Denis Thom sent a letter to investors telling them they may not get paid.

"Please do not rely on this payment being made in part or in full as our ability to do so is entirely based on loans being repaid over the next few weeks," he said.

If Strategic did not meet the target payment by January 7, that would trigger "an event of review".

Strategic would have a fortnight to "correct the position" or negotiate an alternative arrangement. If Strategic's trustee did not accept this, or Strategic was unable to remedy the default, then the trustee "needs to decide what action if any it will take", Mr Thom said.

About 60 per cent of the money Strategic lent was on a second mortgage with 41 per cent on first mortgage.

Strategic had reduced the amount owed to Bank of Scotland by $5 million this week and the debt was down to $11 million.

But Strategic was still working on getting more cash in for the first repayment to investors. The loans involved conditional and unconditional sales, which had to be completed before Strategic could be paid.

If the deals went through, Bank of Scotland would be fully repaid and there would be money left over to pay "some or all" of the money to investors on January 7.

"In the current market we cannot be certain that these loans will be repaid as and when we would like," Mr Thom said.

If the deals were not done before the Christmas holidays, the money might not come through till the end of January "or potentially later", Mr Thom said.

- © Fairfax NZ News