Following High Court agreement, statutory managers Grant Thornton last week paid out $9 million to HMF investors in an interim distribution with a further $3 million available to be paid out, after the next court hearing in late May.
The full $12 million payments equate to 13.4c in the dollar for investors, given the HMF portfolio was valued in investor statements at $89 million 24 months ago.
While Grant Thornton statutory manager Graeme McGlinn said yesterday he was "keenly aware" many investors needed their funds as soon as possible, it would be "several years" before payouts were completed.
"Once the court decision [from May] is known, the statutory managers can sell down the balance of the [HMF] portfolio in an orderly way for investors, and distribute it in accordance with the court's guidance.
"This will happen over several years, as many of the investments are long term," Mr McGlinn said in the managers' 10th report on HMF yesterday.
Later this month, claims covering $2.1 million in shares will be heard in the High Court by financiers alleging the shares were loan securities provided by Mr Hubbard, which Grant Thornton said it would "vigourously defend".
In June 2010, the Government placed South Canterbury founder Allan Hubbard, and his wife Jean, HMF and Aorangi Securities and seven trusts in statutory management. South Canterbury went into receivership that August, triggering the Government to make a full settlement of $1.6 billion owed to 35,000 investors under its retail deposit guarantee scheme.
A year on, Mr Hubbard faced 50 fraud allegations by the Serious Fraud Office over HMF and Aorangi Securities, but following his death on September 2 last year in a motor accident near Oamaru, the charges were dropped and Hubbards were released from statutory management.
In March 2010 the HMF portfolio was recorded in investor statements at a total value of $89 million. However, Mr McGlinn said yesterday that just before the release of last week's $9 million the portfolio value was about $43 million - more than 51% less than stated earlier.
"This is due to fund discrepancies and a general decline in the share markets over the last two years," Mr McGlinn said.
While most investors held portfolio stakes in shares, the total amount of cash owing some on investor statements, at March 31, 2010, was $6.10 million, before adjustments, which took the total to $12.60 million.
However, the amount of cash actually available in HMF's bank account at March 31, 2010 was only $234,000 - a cash shortfall of $12.35 million, the managers' said.
Grant Thornton's proposal for the High Court to consider shortly is that unallocated shares held by HMF as at June 2010 be used to help make up the cash shortfall, or potentially there will be no payment made to cash-component investors.
Mr McGlinn said the managers had selected and sold shares held by HMF to provide the cash for the first payout, saying shares were sold at less than the current market price, and the sales were timed so as not to depress prices.
"We have previously advised that we asked the court to decide on the fairest way of calculating what each investor in HMF should receive. The court hearing is scheduled for May 21 and 22," Mr McGlinn said.
Aorangi Securities owes investors about $97 million and by September they had received 12c in the dollar, or about $11.5 million. Some had also received a wellbeing allowance; determined by a third-party assessor.
In December, Grant Thornton said disputes and unresolved issues over ownership of Aorangi Securities assets were delaying realisation of investors' money.
The statutory managers were unable to make further capital distributions to investors at the time and the position would be reassessed in mid-2012.
Total realisations at December were about $34 million, but were less than the previously estimated $40 million, because of a dispute with a non-Hubbard shareholder in a farm property. About $20 million is being held pending determination of ownership of the proceeds.
HMF portfolio details
• At end of February, estimated value was $42.96 million.
• During March, about $6.5 million of investments sold, sales past week to make up $9 million distribution.
• HMF share portfolio: Diligent, value up 51.56%, Ebos Group up 12.93%, Ryman Healthcare, Metlife Care and Summerset, up respectively 9.54%, 5.26% and 5.88%. Fisher & Paykel Appliances up 15.71%, Mainfreight, down 8.97%, NZ Oil & Gas up 5.71% , Smartpay down 5.56%, Olympus Pacific Minerals, up 20%.
• Total statutory management costs, June 2010 to February 2012, $3.73 million.
