Auckland-based property financier Viaduct Capital has been placed into receivership, owing $7.8 million to investors.While the Treasury booted Viaduct Capital out of the retail deposit guarantee scheme last April, approximately $7.3 million of secured deb
Auckland-based property financier Viaduct Capital has been placed into receivership, owing $7.8 million to investors.
While the Treasury booted Viaduct Capital out of the retail deposit guarantee scheme last April, approximately $7.3 million of secured debentures are still covered by the guarantee.
The balance – just $500,000 – is unguaranteed.
The guarantee was still valid for deposits made up until the withdrawal of the guarantee on April 20, 2009. The withdrawal forced Viaduct to cancel a prospectus seeking $50 million.
Iain Mclennan, of McDonald Vague, was appointed receiver at 5.17pm yesterday afternoon after Viaduct’s trustee had met with the directors.
Viaduct Capital current directors are Auckland businessmen Bruce McKay and Richard Blackwood. Former director Nick Wevers resigned in September.
Mr McLennan was due to meet with the directors at 11am this morning, he told NBR.
Colin Wilson of Prince and Partners Trustee Company Limited said the decision to appoint a receiver was to protect the interests of investors “through an orderly realisation of the company’s assets.”
Money back guarantee
Treasury director of financial operations Dr Brian McCulloch said all eligible Viaduct Capital depositors will get the money they are entitled to under the Crown retail deposit guarantee scheme
Eligible depositors will be contacted by the Treasury in about six weeks and provided with information about how to claim under the terms of the Crown retail deposit guarantee, he said.
"The Crown stands fully behind its guarantee commitments, and we expect an orderly process of payment to eligible Viaduct Capital depositors," said Dr McCulloch.
"It is important to remember that it is the eligible depositors that are guaranteed rather than the company. The Crown retail deposit guarantee scheme was introduced to maintain depositor confidence by protecting eligible depositors.
"Over the life of the scheme, exits, mergers and wind-downs will occur. This is normal financial sector activity and is expected to continue," said Dr McCulloch.
Bublitz factor
Many of the concerns that led the Treasury to withdraw the guarantee last year related to Viaduct’s links to Paul Bublitz’s Hunter Capital Group.
Treasury alleged that Hunter Capital Group may have benefited from the guarantee in a way that was not intended by the Crown.
Hunter Capital lent Viaduct shareholder Phoenix money to enable it to buy the company.
Viaduct then engaged Mr Bublitz on a $210,000 annual contract to source lending opportunities – a contract the company maintains was on an arms length commercial basis.
Mr Bublitz also sold a number of assets and loans to Viaduct, taking as part of his payment $2.35 million in Viaduct convertible capital notes.
This meant some transactions were not considered related party deals that needed to be disclosed.
The capital notes were not government guaranteed, but the asset sales still brought some cash into Hunter Capital.
The Treasury alleged that Viaduct did not conduct adequate due diligence on the loans and questioned the value of put options and indemnities that were part of the sale.
Viaduct’s property investments included a 12.5% interest in Nourish Group director Brian Fitzgerald and Strategic Finance director Marc Lindale’s Dockland Holdings, which collected the rent on Princes Wharf properties. Hunter Capital is a shareholder.
