Investors back Octaviar offer of cash payout By KRIS HALL - The Press | Wednesday, 10 September 2008
"Investors in failed finance company OPI Pacific Finance have backed a new arrangement with stricken parent company Octaviar that could see them offered cash for their debentures and capital notes.
By accepting Octaviar's "secured debt arrangement" yesterday, investors opened the door to a cash offer of up to 22.5c for each dollar owed.
However, all will be in vain if other major creditors vote against the deal.
OPI Pacific Finance, formerly MFS Pacific Finance, was forced to default on repayments in late January when cash-strapped Queensland property financier Octaviar, then MFS, withdrew financial support.
OPI has about 12,000 investors, with some $256.7 million owed to debenture holders and $56.7m to note holders.
As with OPI's May moratorium vote, yesterday's deal is dependent on Octaviar striking similar arrangements with other substantial creditors on the same terms. Failure to do so could result in Octaviar being placed in liquidation.
Should fellow creditors also back the deal, however, it would pave the way for Octaviar to buy out both debenture and note holders.
OPI director Jason Maywald told investors that liquidation of Octaviar was the "very worst thing that could happen". Such circumstances would result in a "blood bath" he said, with all major creditors trying to knock each other's claims out.
Liquidation of Octaviar would likely see OPI placed into receivership, he said, while a liquidator might seek to "claw back" the $A20m ($NZ23.4m) received by OPI in May and divided among investors.
Fellow creditor Property Income Fund (PIF) would also likely pursue a $17.5m claim against OPI. PIF commenced litigation against Octaviar and Octaviar Administration in June for $A147m and named OPI as a defendant.
Further still, OPI's $A270m damages claim against Octaviar alleging breaches of management agreement could be disputed by Octaviar's liquidator, said Maywald and vulture fund Fortress would appoint its own receiver over OPI to chase an outstanding loan.
"I cannot make any guarantees that there will be cash available in 2011 (should you accept the terms)," he said. "I can't speak for individual investors, but the best thing for the company (OPI) is to enter into this and for Octaviar to survive."
Under the terms agreed, OPI's debenture holders would receive 22.5c, less 12.12c they received in May, while note holders would get 15c for each dollar owed.
Investors now have until the end of the month to decide on whether to take up the payout offer of an extra 22.5c and give up their remaining claims.
Debenture holders will receive a further 7.6c for each dollar owed, from $A16m acquired through recent loan sales, paid on September 30.
It is believed that about 85 percent of note holders and two-thirds of debenture holders voted on the proposal.
Several hundred investors descended on Auckland's Ellerslie events centre for yesterday's meeting and tempers were frayed from the outset with investors questioning OPI's duty of care.
Note holder Bernard Stanley, 84, said: "I am bitterly disillusioned that we were never informed that our hard-earned savings were going into mezzanine loans for shonky, over-geared Australian developers who, when things got tough, disappeared into a mix of smoke and mirrors."
Investors heard that, as at July end, OPI had 32 loans outstanding. Maywald revealed OPI may only recover a further $A46.4m from its book compared to the $A63.4m announced in March.
Under the secured-debt arrangement, OPI debenture holders could receive $1 for every $1 owed as of May 19 over a three-year period. Note holders could expect up to 84c.
Liquidation of all Octaviar assets excluding travel company Stella, currently valued at $A215m would hand debenture holders 58c for every dollar owed as at May 19, over a three to five-year period.
Including Stella, the same group would receive 78c in the dollar. In both of these scenarios, unsecured note holders would get nothing."
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