Lombard Finance has suspended interest and debt repayments

Property Finance company Lombard Finance has suspended interest and debt repayments and will ask debenture holders for a moratorium on future repayments. Investors are owed NZ$127 million by Lombard Finance.

Lombard Group said Lombard Finance's trustee, Perpetual Trustee, was considering the moratorium proposal and it hoped to send a detailed note to debenture holders in the next 10 days. It said it had stopped taking in investments and any money received on or after April 2 would be deposited in a trust.

Lombard Group CEO Michael Reeves said business confidence had fallen since the collapse of Bridgecorp in July last year and had deteriorated markedly in the last month as real estate values fell.

This had led to a "lack of sales and the lack of bank finance available to our borrowers due to the impact of the international credit squeeze," Reeves said in a statement.

"ln recent months our borrowers have found it increasingly difficult to sell properties and equally difficult to refinance their mortgages and repay their loans to Lombard Finance," Reeves said. "As a result Lombard Finance in turn is unlikely to be able to meet its obligations to investors as they fall due in late April or May. lt is clear from recent events that this is a systematic failure of an entire industry, and from our perspective a moratorium is now the only responsible course of action," he said.

"l and rest of the Board very much regret this has occurred and the anguish this will cause investors. However, we believe the interests of investors are best served by a moratorium to enable an orderly realisation of its loan book."

Reeves said there was no related party lending and all mortgages were over property in New Zealand.

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[bellpawt]

Thanx , Mr B