Statutory Managers’ Hubbard update

Update on Aorangi Securities Limited and associated charitable trusts under Statutory Management

4 February 2013

The 13th report by the Grant Thornton statutory managers to Aorangi Securities Limited investors highlights that the ownership of the “introduced assets” is the most important outstanding issue to be resolved in order to return a significant percentage of capital to Aorangi investors.

The statutory managers believe Aorangi investors could get almost all of their investment capital back if the managers are successful in the Court hearing set down for 20 May 2013 in the Timaru High Court. If not, then Aorangi investors will only get around 35 cents in the dollar, including the 15 cents already paid out which is just $34 million in total

During the period from April 2009 to March 2010, Mr and Mrs Hubbard introduced assets into Aorangi. They did so in their personal capacities, as trustees of various trusts and as company shareholders and directors. Those assets were in the form of shares and loans in farm owning companies, partnerships and commercial entities. There are some 34 separate entities involved with the assets having an estimated current value of approximately $60 million.

The report reveals that the statutory managers are now at the point where they have completed a full overview of the history of Aorangi and of its failure. As this matter is before the Court they are unable to provide investors with much of the detail of their case. However, legal advisers for the statutory managers believe the case is strong. Affidavits provided to the High Court outline Aorangi’s history and the statutory managers’ conclusions, based on the evidence they have found as to why assets were introduced in 2009 and 2010.

To further protect Aorangi investors the statutory managers have also asked the Court to rule that Mr and Mrs Hubbard are only paid for the assets they introduced after the claims of investors have been met.

The statutory managers report that they have made progress in ‘cashing up’ many of these investments and they now await the outcome of the Court hearing. However, there are still some loans remaining to secure on behalf of investors, including loans to Te Tua Charitable Trust and other South Island farming interests, and $61.5m in capital from the “introduced assets”. Negotiations or Court actions to recover the loans are well advanced the report reveals

Update on Hubbard Management Funds (HMF)

15 February 2013

The 13th report by the Grant Thornton statutory managers to HMF investors announces that investors can expect to receive all their original capital back from the capital return pool.

All investors will receive back the capital they originally invested in HMF. This will come as an enormous relief to investors, who have been uncertain about repayments since the fund was put into statutory management.

Investors who have already taken out more cash from HMF than they put in will receive no further payment.

Around 208 investors will receive a $2.1 million payout today, which equates to around 10 cents in the dollar from the capital return pool.

Distribution of funds is well underway following the High Court’s decision in December 2012. The $2.1 million payout is the second payout, after an interim distribution of $9 million in March 2012.

Of the approximately 300 investors in HMF, 92 are not entitled to further payments from the capital return pool as they have already taken out more than they invested. These investors will not have to pay anything back, but will not receive further payments going forward. Around 70 of these investors are unlikely to be entitled to any further payment as the interim distribution they received in March 2012 exceeded their entitlement under the final distribution order calculation. All other investors are eligible to receive payments from the surplus assets pool once the capital return pool has been fully paid out.

A further payment from the capital return pool is expected to be paid in March 2013, with further payments to be made as and when the statutory managers are able realise sufficient assets to do so.

Once all capital return pool payments are completed, the statutory managers will reassess the value of the remaining assets and confirm the entitlement calculation for each investor to the surplus pool assets.

The remainder of the assets will be allocated on a basis that reflects the amount invested, the time investors were in HMF, and the returns in the New Zealand share market across the periods involved.

Now that the distribution process has begun, the statutory managers have suspended all distressed investor payments as of 31 January 2013.

The next report is expected to be published during July 2013.

Frequently asked questions

A list of frequently asked questions are available. Click here to view. These questions will continue to be updated from time to time as new questions and information come to hand. It is recognised that not all investors will have computer access so copies of these questions will be available to be mailed to investors on request.

Postal delivery information for investors

Copies of the Aorangi Statutory Managers' Report were placed in the post 31 January 2013 and the HMF Statutory Managers' Report was posted 15 February 2013 for investors.

Further information

We will look to keep investors informed on a regular basis.

The Media are asked to contact Julian Light of Acumen Republic on +64 (0)4 494 5146 or jlight@acumenrepublic.com