St Laurence-linked company faces receivership

A company associated with St Laurence - Direct Property Investments No 6 - may be facing the prospect of receivership after failing to repay bond investors NZ$9.5 million in February. The company is currently putting together a proposal to extend terms of the bonds, which will be put to the bondholders for consideration only if the Trustee, Perpetual, believes there is merit.

Direct Property Investments No 6 is owned by Direct Property Investments and was not put under receivership when companies belonging to the St Laurence group were, as it is not part of the borrowing group. However, Direct Property Investments is already under receivership.

In its annual statements, the company had flagged the uncertainty it faced relating to its ability to refinance this NZ$9.5 million debt, and indicated it will be forced to sell its investment property if it is unable to refinance. It also said that given the time required for such a sale, there was a possibility the Trustee might take action.

The company's investment property was devalued to NZ$45 million in March 2009, from NZ$53 million a year earlier. There is a NZ$27 million term loan from ASB Bank against this property. While the loan covenant was breached due to the drop in value, ASB chose not to act on the breach and extended the maturity date of the loan to August 2011 from November 2009 along with revised terms that require the company to make quarterly principal repayments of $325,000 over the term of the facility.