Bridgecorp says it is 'secure'

By Chris Hutching

Friday 17th September 2004

Bridgecorp general manager Mike Jeffcoat has denied that the company's exposure to bad debts is increasing after publicity about a legal dispute involving Matauri X and the collapse this week of a Christchurch building company, Permanent Homes.

Bridgecorp is the sixth largest New Zealand finance company, with assets of $512 million and shareholders funds of around $62 million.

Jeffcoat said that in spite of the highly publicised and long-running dispute over Matauri X and the recent default of loans by Permanent Homes, the company had not seen an upsurge in exposure to bad debts and in fact the level of non-accrual assets was as low as it ever has been.

He said Permanent Homes was a small development project involving nine houses in varying stages of completion. As lender, Bridgecorp had served a Property Law Act notice that takes effect on September 20 (the principal of Permanent Homes, Grant Maitland, is also a director and shareholder in another building firm that collapsed last year). But he acknowledged that there were strains in the building industry due to cost increases and interest rate rises.

"There have been a number of projects in Auckland where developers have pre-sold projects and by the time they come to contract pricing their margins have disappeared and in some cases they've refunded deposits rather than proceed."

Bridgecorp's unsecured subordinated notes investment to the public as advertised on its web site offers returns of over 11.5% to 12.5%. The Grosvenor Bond Watch web site rates it as G6 (G1 the most secure and G8 the least secure) which is defined as: "Ability to meet current obligations dependent upon favourable economic and/or business conditions, concern about security over the long term."

Specialist property financier Bridgecorp, under managing director Rod Petricevic, has been positioning itself to take advantage of rationalisation in the finance sector with its purchase of a 19.9% stake in Dorchester Pacific, a move that came under the scrutiny of the Takeovers Panel over a lockup deed of voting rights owned by Dorchester's Brent King.

The deed meant King would agree to "freeze" another 5% of Dorchester's shares for 10 months in exchange for $600,000. The panel is considering remedies.

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