Wellington, March 12 NZPA - Strategic Finance Ltd is in the hands of receivers, against the wishes of its board, which regards the move as destructive.

Strategic Finance has around 13,000 investors with investments of $417 million. Many of the investors are elderly people who saved for their retirement. The receivership ends an earlier moratorium deal.

In calling in receivers John Fisk and Colin McCloy of PricewaterhouseCoopers, trustee Perpetual Trust said receivership was a better than proceeding with proposals the company had received.

"The receivers will be focused on achieving the best outcome for investors, and in particular that it is expected ultimately to provide better returns for investors," Perpetual Trust said.

The board begged to differ, expressing disappointment and surprise at the move.

"The board were able to deliver six viable options to Perpetual Trust, which the board believes would have provided a better outcome than receivership.

"The board considers receivership to be very destructive to value and detrimental to the repayment of monies to investors. Two of the proposals were well advanced and would have provided for an immediate cash payment, ongoing income and the potential for maximum recovery for investors."

There was strong support from Bank of Scotland, the single largest debenture holder, for both transactions. The board said and the trustee has chosen not to allow investors to consider and vote on the proposals.

Perpetual Trust said Strategic Finance's loan book had declined in value to $220 million in December 2009 from $477m when the moratorium was approved in December 2008.

The decline in the value together with failure to meet the targeted level of investor payments envisaged by the moratorium created a review events under the trust deed.

Perpetual Trust believed it provided the board and management team of Strategic Finance with a reasonable amount of time to develop offers and for it to submit them to Perpetual Trust.

Mr Fisk said on Radio New Zealand that a payout "certainly won't be 100c in the dollar".

He said directors had been rather optimistic about what the outcomes might be.

Strategic Finance's mostly had development loans, many were subordinated to priority charges and a number of loans were on bare land. There was a concentration of loans in Queenstown.

He said regulators would be looking at the situation.

Perpetual Trust will be writing to investors next week and the receivers will be in contact with investors in the next few weeks with contact details, their expectation of the timetable for their work programme and when they will be able to advise their expectation of how much of investors' monies will be realised.

Mr Fisk said the receivers were working as quickly as they could to determine the best option going forward to ensure maximum funds were distributed to investors.

He also believed the receivership would provide greater certainty, including for unsecured creditors owed $5.2m.

Strategic Finance is a specialist property financier whose business was mainly funded by debentures. In August 2008 it withdrew its prospectus and suspended all payments to security holders.

In December 2008 it won approval for a managed wind-down of its loan book as an alternative to receivership. An argument at the time was that a receivership would bring a fire sale of assets.

The company made an unaudited loss of $99.8m in the six months to December 31 due to significant provisioning on its property portfolio.

Its loan book value fell below 75 percent of principal owed to debenture holders, depositors and subordinated note holders. This, as well as the failure to make the target payments to investors on January 7, triggered an event review and talks with the trustee.

Former All Black Jock Hobbs is a director of the company.

Over the past three years, around 30 finance companies have gone into receivership or liquidation, entered into moratoria, or frozen repayments to investors, according to Lianne Dalziel, chairwoman of the Commerce Committee.