Banksia debenture holders to get bigger return after sale of loan portfolio

Banksia debenture holders can now expect to receive up to 85¢ from every dollar they lost when the lender collapsed last year.

By InvestSMART · 24 Apr 2013

By InvestSMART ·
24 Apr 2013

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Banksia debenture holders can now expect to receive up to 85¢ from every dollar they lost when the lender collapsed last year.

Receiver of the non-bank lender McGrathNicol said on Tuesday it sold Banksia's $240 million loan portfolio to Deutsche Bank for an undisclosed sum.

"We are pleased to advise our revised best estimate is an overall return of 80 to 85¢ in the dollar," McGrathNicol said. It now expects to distribute 10¢ a dollar around May 17 and a further 35¢ before the end of the financial year.

"It is our expectation that by 30 June, 2013, Banksia Securities debenture holders would have received total repayments of 65¢ in the dollar," McGrathNicol said.

The firm was still dealing with non-core assets, including freehold properties, financial products and trying to recover inter-company loans. Banksia had 10 offices in Victoria, NSW and South Australia, when it was placed in receivership on October 25 last year with $663 million in investors' funds.

Banksia's Cherry Fund Limited collapsed five days later, owing its investors a further $10 million.

Investors in Cherry Fund may get more than forecast and should expect to receive 20¢ for every dollar they lost around May 17.

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Frequently Asked Questions about this Article…

What return can Banksia debenture holders now expect from the receivership?

The receiver McGrathNicol says the revised best estimate is an overall return of 80 to 85 cents in the dollar for Banksia debenture holders — meaning up to 85¢ back for every $1 lost when the lender collapsed.

When will Banksia debenture holders get payouts and how much will they receive soon?

McGrathNicol expects to distribute 10¢ in the dollar around May 17 and a further 35¢ before the end of the financial year. By 30 June 2013 the receiver expects debenture holders to have received total repayments of 65¢ in the dollar, with additional recoveries to reach the 80–85¢ estimate.

Who bought Banksia’s loan portfolio and what was sold?

The receiver sold Banksia’s $240 million loan portfolio to Deutsche Bank. The sale price was not disclosed.

Who is managing the Banksia receivership and what updates have they provided?

McGrathNicol is the receiver handling Banksia’s affairs. They announced the sale of the $240 million loan book to Deutsche Bank and provided revised recovery and distribution estimates for debenture holders.

What other assets are still being dealt with in the Banksia wind‑up?

McGrathNicol is still working on non‑core assets such as freehold properties and financial products, and is trying to recover inter‑company loans as part of the ongoing process to maximise returns to investors.

How large was Banksia’s collapse and where did it operate?

Banksia was placed in receivership on October 25 last year. At that time it had 10 offices across Victoria, New South Wales and South Australia and held about $663 million in investors’ funds.

What should investors in Banksia’s Cherry Fund Limited expect?

Banksia’s Cherry Fund Limited collapsed five days after the main group and owed investors about $10 million. Cherry Fund investors may receive more than earlier forecasts and should expect to receive about 20¢ in the dollar around May 17.

What does “in the dollar” mean for everyday investors looking at these recoveries?

‘In the dollar’ is a simple way of saying how many cents will be returned for every dollar lost. For example, 65¢ in the dollar means investors would have received 65 cents back for every $1 they originally lost.