Wellington, July 19 NZPA - The chief executive of financially-troubled Australian property group Octaviar has threatened to place the crumbling empire in liquidation if creditors -- including New Zealand finance company Pacific Finance -- owed more than $A1 billion do not support a payout of A22.5c in the dollar.

Octaviar boss Chris Scott told The Age newspaper the company's creditors, who also include noteholders, investors in unlisted managed funds and the Australian Taxation Office, should let Octaviar to trade its way out of its troubles.

"The worst option is liquidation," he said.

Octaviar has sent a letter to its 560 noteholders asking them to vote on a payout that would see them either accept an immediate cash payment in exchange for their notes, remain a noteholder until June 2011 and enjoy the benefits of security over available group assets, or a combination of the two.

Noteholders have been asked to respond by August 11 and the company has said the offer could erase $A600 million in debt if successful.

OPI Pacific Finance has made a damages claim for about $A270 million against Queensland-based Octaviar and one of that company's subsidiaries.

Previously named MFS, investment manager Octaviar owns 38.5 per cent of OPI New Zealand, formerly MFS NZ, which owns OPI Pacific Finance.

Last month debenture holders in OPI Pacific Finance, formerly MFS Pacific Finance, voted for a moratorium arrangement after OPI Pacific Finance was forced to default on repayments in late January when Octaviar declined to provide further support because of its own difficult financial position.

Provision was made in Octaviar's financial statements at the end of December for an obligation of A$246 million to OPI Pacific Finance under a put option. An initial amount of A$20 million was paid in March.

The claim for damages from Octaviar is related to the parent company's management of the OPI Pacific Finance loan book.

In Christchurch, financial advisory firm Vestar is owned by ASX-listed Octaviar group but its business is to be transferred to Christchurch investment company Gould Wealth Management.

A group of 45 investors who received information from Vestar have said they want to sue their former financial advisers, the directors and investment committee for tying up millions of dollars in finance companies which have since gone into receivership or moratorium.

Finance companies recommended to the investors included Bridgecorp, Capital and Merchant, OPI Pacific Finance, MFS Boston Finance, St Laurence and Property Finance.

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