28th May 2008

 

OPEN LETTER TO SECURED DEBENTURE INVESTORS IN BELGRAVE FINANCE LIMITED

Dear Investors

On Friday 16th of May 2008, the Directors of Belgrave Finance Limited (“BFL”) convened a Special Board Meeting to discuss the Company’s ongoing ability to meet its obligations to repay its Secured Debenture Investors (“Investors”) in a timely manner over the upcoming months. We had become aware that an expected substantial funding line was now no longer available to the Company. Until this time, the Directors of BFL have always believed in the viability of our business, despite the current market conditions.

Over the last twelve days, the Directors of BFL have engaged professional representation to assist us in identifying any and all possible avenues to provide the best possible outcome for the Investors in BFL. These discussions have included assessing the various merits of a proposed moratorium, capital restructure, and seeking approval of alternative funding lines.

Our future thoughts have been tempered by the realisation of the tough market conditions we currently face. A majority of our remaining loans are mezzanine in nature, with many loans being secured by land with development potential. We have been affected by the current property market downturn and the inability of developers to raise alternative funding from other financiers.

Due to the significant lack of investor confidence in the finance industry, resulting from well-publicised previous failures, our reinvestment rates for Secured Debenture Stock investments have fallen alarmingly. Based on current market information we do not expect any improvement in the reinvestment rate in the foreseeable future.

After considering numerous options, including the merits of a moratorium, we have made a decision, that we believe is in the best interests of our Investors, for the Company to be placed in receivership. The Directors of BFL have today asked our Trustee, Covenant Trustee Company Limited to appoint receivers and managers under the powers contained in the Trust Deed. Covenant has appointed Grant Graham & Brendan Gibson (from KordaMentha, Chartered Accountants) as Receivers. The Directors are committed to working with the Receivers in the collection of outstanding loans in the most effective manner possible.

Following this announcement, the Receivers will be in contact with Investors over the upcoming days, and will use the BFL website (www.belgrave.co.nz) as a vehicle to communicate with Investors.

Contact details for KordaMentha are as follows:

Web Site:  www.kordamentha.com
Office Phone Number: (09) 307 7865  
Postal Address:   PO Box 982, Shortland Street, Auckland

We both appreciate the support that many of our Investors have provided us with over the past year and more. We are personally disappointed that the current status of the market has lead to this decision, despite our very best endeavours.

As Directors of BFL, we both intend to work closely with the Receivers to achieve the best possible outcome for our Investors.

 

Yours faithfully

Shane Buckley
MANAGING DIRECTOR
BELGRAVE FINANCE LIMITED
Steve Smith
DIRECTOR
BELGRAVE FINANCE LIMITED