Bridgecorp to span Tasman in $50m growth bid

Friday 15th June 2001

ROD PETRICEVIC: Less of a risk-taker these days, he emphasises how Bridgecorp conservatively manages its risk

Rod Petricevic is pushing ahead with growth plans, he tells DEBORAH HILL CONE in an exclusive interview

Fast-growing finance company Bridgecorp revealed yesterday it would complete a trust deed and prospectus in Australia by the end of the month.

The niche loans specialist reported an after-tax profit of $6.8 million for the year to March, almost double the previous year - and now plans a $50 million capital raising across the Tasman.

While some in the property industry struggled with high-profile collapses, defaults and a flat market, Bridgecorp thrived on it - boosting its revenue from $19 million in 2000 to $39.9 million this year.

"We tend to reverse the cycle - when times are tougher it has been better for us," Bridgecorp managing director Rod Petricevic said.

Bridgecorp provides bridging finance and short term loans to the property industry, with practically all of the loans secured against real estate.

It has a wide range of clients including individuals such as apartment buyers but is known to help out developers who have run out of cash at the end of a project and need a short- term loan.

Mr Petricevic is comfortable sticking to property: "Half the world's wealth is in real estate," he says, quoting Warren Buffett - "We're happy with bricks and mortar as security."

While Bridgecorp is well known in property circles it has kept a low profile in the mainstream business community, partly because Mr Petricevic rarely gives media interviews.

He became frustrated that any attention the company received was overshadowed by a rehash of his past. He was part of Bruce Judge's 1980s clique - inevitably referred to as high fliers, although he hates that term - who crashed down to earth after the sharemarket crash.

Mr Petricevic's 1980s company Euro-National Corporation, made huge losses but never collapsed - what was Euro-National is now part of CDL Hotels.

Less of a risk-taker these days Mr Petricevic emphasises how Bridgecorp conservatively manages its risk with an average loan of only $650,000 on terms of less than eight months and the fact that half of the loan book is now insured by Lloyd's.

Bridgecorp is also moving away from its role as a developer - one of its current projects is building a 75-apartment development in Kelston - but development is not its focus: "We're principally a money lender," Mr Petricevic said.

Bridgecorp's shares are traded on the secondary market - but not often with the scrip closely held.

Mr Petricevic owns 54% of the company. Fifteen hundred shareholders each own fewer than 500 shares, below the level required to be considered a minimum parcel.

The company plans to buy back some of the smaller share parcels or bring their shares up to a minimum parcel as it does not make sense to have so many small shareholders.

"Issuing a dividend cheque for 6c is expensive - the administration costs are very high."

There are 40 million shares trading on the secondary market at about 55-65c per share, giving the company a market capitalisation of only $20 million.

"We're seeing our company into this marketplace at one third to one half of its real value ... Australia is a more international marketplace."

Bridgecorp is now expanding into Australia after being given the cold shoulder by the New Zealand Stock Exchange.

A capital notes offering made last year - a fallback after being rebuffed by the NZSE - was oversubscribed, raising $18 million rather than the target of $10 million.

"[Capital notes] look and feel like debt to an investor but actually add to shareholder funds," Mr Petricevic said.

Now Bridgecorp is planning to do the same in Australia. The trust deed and prospectus should be finished by the end of June.

"We will set up a lookalike Bridgecorp organisation in Australia ... ASX listing is an option. I always said we would list - and ideally do it on the NZSE - we may still do it."

Bridgecorp financial controller Robert Roest defended the company's decision to capitalise $11.9 million in fees and interest in its statement of cashflows - essentially treating the sum as an asset, not an expense.

He said the treatment reflected the nature of the company's business where fees were often not paid until the loan was repaid and so could not be recognised as operating cash flow. The company could get around that by lending the borrower more to cover the fees, which they would then hand back to the company and it was increasingly doing so.

Mr Roest also defended the high figure for "other directors' remuneration" - $994,000 - compared with $492,000 the previous year.

Mr Roest said that figure accounted for managing director Mr Petricevic's $200,000 base salary and his performance-based payments.

The performance-based component was tied to the company's profit. "If the company didn't perform he would get $200,000," Mr Roest said.

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