Last night on TVNZ's Close Up program shareholder's association chief Bruce Shepherd explained what was behind the latest announcement by Hanover Finance's directors that the 100% payout of principal over 5 years they promised last December, when their creditors agreed to not put the company into liquidation, has suddenly been reduced to 70% : the company's two shyster owners Eric Watson and Mark Hotchin haven't put in the $96 million they promised they would. $96 mil as a percentage of the $527 mil Watson and Hotchin owe people? - oops, that's 18 cents in the dollar gone. The other 12 cents? Well, they will want their directors fees and dividends of course (Watson and Hotchin siphoned $91 million out of depositors' funds in the 2 previous years) - hey, they need to keep throwing their million dollar parties.
A pithy but no doubt accurate comment on the National Business Review website is reproduced below. A recent picture of Watson who now lives in London is above.
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From the outset, the DRP [debt restructuring plan] sounded like nothing more than a feel-good plan to mollify investors. 100's of poor trusting buggers gathered at various spiffy locations around NZ to listen to Hotchin waffle on about how much he cared about them. Uh-huh! Watson (who never fronts up for anything) & Hotchin never intended to part with more than a couple of dribbles anyway, before throwing up their hands and saying "sorry, guys, the coffers are empty". Now they've been delivered a bonus in the form of a market that's refusing to stabilize (or so Hanover would have everyone believe!), so it almost sounds reasonable that they can't deliver on their original promise. The adjustment of that original 100c down to 70 (and how come United get an extra 20c?) is just cushioning the blow when they finally spit the dummy and "admit" that they're unable to pay out any more at all. Hanover should have been wound up, and whatever money at that time made available to investors. Even if it was 50c, which Hotchin said would not be a great outcome for investors. No? A darn site better than 6!! By allowing Hanover to operate for another 9 months or so, that's given them time to squirrel more cash away, and cooking the books even further before winding up in their own good time. If they miss 2 payments to investors, the company gets wound up, so does anyone want to guess how many more payments will be made? The government should have stepped in yonks ago and sorted this whole mess out, but they didn't and probably never will. And that's a disgrace! The investors were hoodwinked by Hotchins' smooth patter, and now they're suffering as a result of that and many lives have been ruined. That's another disgrace! All in all, it's a pretty disgraceful episode in NZ's history.
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