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Payment on way to Banksia investors

Receivers for Banksia Securities have announced investors will soon receive a payment of 20 cents in the dollar.

December 8, 2012 4:35am

The receivers of stricken finance firm Banksia Securities yesterday announced the first payment was being made to investors — at a rate of 20¢ in each dollar.

McGrathNicol has estimated a total repayment to debenture holders of between 50¢ and 65¢ in the dollar.

‘‘We hope the first distribution process provides some initial relief to investors following the failure of Banksia Securities Limited,’’ receiver Tony McGrath said.

‘‘The loan recovery processes we have put in place aims to ensure further distributions are paid as quickly as possible.’’

A report released to investors yesterday included information on estimated total returns.

It contains information on a range of matters including the historical performance of Banksia and Cherry Funds, an analysis of the loan book and events leading up to the failure.

‘‘The receivers attribute the failure of the companies to several factors including a general reduction in property values, difficult credit market conditions, inadequate provisioning in the loan books and a mismatch between the timing of debentures due for repayment and the recoverability of borrowers’ loans,’’ Mr McGrath said.

He said in addition to recovering loans and making repayments to debenture holders, the receivers were now focused on further investigating the reasons for the companies’ failure.

Further key points from the report include Banksia had outstanding commitments to debenture holders of $663million as at October 25 this year and had advanced 956 loans to individual borrowers, totalling about $527million, the difference being predominantly cash at bank.

It said both Banksia and Cherry Funds reported profits in recent years, but as certain loans were non-performing for some time and provisions were insufficient, both companies, particularly Banksia, most likely incurred substantial losses in recent years.

Loan portfolios of the companies will be realised through a combination of refinancing, repayment, loan portfolio sales and enforcement action, such as taking possession of and realising property.

A second payment to Banksia investors is expected before June 30 next year.

A statement from McGrathNicol yesterday said the amount of distribution is dependent on progress achieved with realisation of loan portfolios.

Cherry Funds owes investors about $10million.

It is anticipated to make a total repayment of between 55¢ and 70¢ in the dollar to its debenture holders.

At this stage assets are not in a liquid state and there will not be an immediate distribution.

Debenture holder information sessions are scheduled for Kyabram, Shepparton and Ballarat on Friday, December 14. Those attending will need to register their interest first with Link Market Services by phoning 1800722079.

People can also go to www.mcgrathnicol.com to view the information session online from December 15. A full copy of the report is also available on the McGrathNicol website.

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