HMF investors may lose 50c in dollar

Some investors in the beleaguered Hubbard Management Fund (HMF) may get less than 50% of their investment back, according to statutory managers Grant Thornton.

The HMF fund was a private investment company of the late Timaru financier Allan Hubbard and, unlike his failed South Canterbury Finance which came under a government guarantee and returned $1.75 billion to investors and lenders, HMF's assets were frozen in 2010 and are to be sold off by Grant Thornton and payments made over several years to investors.

Similarly but separately, investors in Mr Hubbard's private Aorangi Securities have faced asset devaluation and have court battles ahead to determine ownership of $60 million of assets claimed by Mr Hubbard's widow, Jean.

While Mr Hubbard once valued HMF at $83 million, Grant Thornton initially said that was overstated and it was worth $60 million, but subsequent cash shortages, costs, financiers' and Hubbard family claims and market movements wiped off a further $17.5 million - eroding HMF's value to about $40.5 million.

Grants Thornton said HMF's gross value in July 2010 was estimated at $70 million, before forensic accountants looked at it. Then by June it was down to $54.5 million and by August this year it was assessed at $46.6 million.

The Otago Daily Times asked Grant Thornton to clarify estimates of possible payouts in the dollar, given the complexity of claimed overstatements and what may be actual investors' funds.

A Grant Thornton spokesman said that if an average weight was carried across all investors, they would get ''around 50c in the dollar''.

''However, each investor is different and it cannot be guaranteed they'll get half each,'' the spokesman said in a statement yesterday.

Grant Thornton was now working out the details, and ''hope to be in a position to make more figures public late next week'', the spokesman said.

This week, Grant Thornton told investors they would not have any of inaugural payments, in total $12 million, ''clawed back'' by court order, and outlined how further payments would first come under a ''capital pool'' for payments, followed by a ''surplus pool'' payout.

The capital pool is the amount required to repay all investors their original investment.

As directed by the High Court, capital gains, interest and dividends which were reported on investor statements would not be considered as part of the capital pool.

The surplus pool is the amount available from asset sales after all capital amounts due have been paid and is allocated according to a court-approved formula.

Of the assets of Aorangi Securities, which Mr Hubbard once valued at $96 million before scaling them down, there is $60 million now at stake. Investors in Aorangi Securities have so far received 15c in the dollar.

Mrs Hubbard has made a claim on that $60 million, saying the assets were never transferred to Aorangi's ownership and therefore are part of her late husband's estate, which would probably wipe out further payments to Aorangi investors.

Critics have been scathing of Grant Thornton, after its discovery of dozens of boxes of documents relating to the case prompted the court date with Mrs Hubbard to be shifted from last October to May 20 next year.

About 230 investors in an investor liaison group last month laid a complaint with the attorney-general and minister of commerce over Grant Thornton's performance since being appointed in June 2010.

simon.hartley@odt.co.nz

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