THE receivers for the failed Banksia Securities Limited (BSL) finance company expect investors will receive a further five to 10 cents in the dollar later this year.
In its latest circular to investors, McGrathNicol said it expected to make the payment if it was able to sell BSL’s investment of about $57 million in another Banksia Financial Group entity, Banksia Mortgages Limited (BML).
McGrathNicol has been appointed as transaction manager for BML and is seeking to sell off BML’s loans.
If the sale of BMF loans is not completed this year, McGrathNicol said it expected to pay about five cents in the dollar later this year from the sale of impaired loans.
A south-west representative on the Banksia investors statewide committee, Russ Goodear, of Warrnambool, said the sale of BSL’s badly-performing loans — or impaired loans, as they are otherwise known — was taking longer than expected.
Mr Goodear said the receivers had to balance the cost of their effort to sell the bad loans against the likely return they would get.
“Some non-performing loans were a disaster,” Mr Goodear said.
He said the investors’ committee believed the receivers were doing a good job and had shown a lot of empathy for investors.
McGrathNicol has so far paid out 65 cents in the dollar to investors and expects the total repayment will be between 80 to 85 cents.
In May, investors received 45 cents in the dollar from the sale of good-performing loans with a face value of $239 million to the Deutsche Bank.
McGrathNicol said it had also been able to recover about $30 million from impaired loans. “We continue to manage 74 impaired loans with a face value of $131 million,” the receivers said.
Twenty-three of these loans, with a face value of $22 million, were without any remaining property security because all the property provided as security had been realised.
The receivers said claims against the guarantors, valuers and other parties were being considered to recover the shortfall owed to BSL.
Other efforts by the receivers to recover money for investors include the sale of three of BSL’s branch offices in the next four weeks.
BSL’s head office in Kyabram in northern Victoria was expected to be marketed for sale late next year.
Securities Holdco Limited, the parent company for the Banksia financial group, had recently paid $3.1 million of an $11 million loan it had with BSL but the timing and amount of further repayments was uncertain and it was expected BSL would suffer a significant shortfall, the receivers said.
In recent months, the receivers questioned about 20 people, including BSL’s directors, in the Supreme Court about BSL’s operations.
McGrathNicol said the public examinations had been useful in gathering information on whether legal action should be taken against those involved in BSL’s collapse.
Separate legal action has already been launched against BSL and its associated company, Cherry Fund, in a class action by the two funds’ 16,000 investors.