C+M debenture holders given bad news

Receivers Richard Simpson and Tim Downes of Grant Thornton said in their first report on the state of affairs of Capital + Merchant Finance that": "Realisations from the assets depend on certain events occurring. The outcomes from various events could materially affect the amount Capital + Merchant Finance receives.

"It is clear from our work, however, that there will not be a full recovery to secured debenture holders."

Simpson and Downes were appointed receivers by the first ranking secured creditor, Fortress Credit Corporation (Australia) II Pty Limited. They were also appointed receivers of Capital + Merchant Investments Limited, a related party. The report says that they have been mindful of the need to ensure that all their actions during the receivership are in the best interests of all the company's stakeholders, including the debenture holders.

Backgrounding the receivership, the Grant Thornton report said that due to the failure of various finance companies, new investments and re-investments were adversely impacted, with re-investments falling to 10-20% compared with 50% a year previously. A number of the properties for which Capital + Merchant Finance held securities had been subject to unsuccessful attempts at sale and had diminishing prospects of realisation at the required values on the open market, forcing short to medium term cash problems.