Delta #EpicFail Noble Subdivision : Avanti Finance —Feeding at the Delta Trough

Election Year : The following opinion is offered in the public interest. -Eds

Received from Christchurch Driver [CD]
Monday, 18 April 2016 11:03 p.m.

Readers may remember that in an earlier post, ‘Gold Band Finance – The Little Finance Company that did (Delta)’ March 2016 – your correspondent was lacking information on what transpired between Avanti Finance and Delta.

Your correspondent indulged in some dark speculations about what Delta might or might not have done. But recently your correspondent has received email information shining a light on that transaction, a welcome piece of disinfectant as Justice Brandeis would say. While we no longer see through a glass darkly on this matter, the disinfectant metaphor is apt, as yet again, Delta suffers another grievous and substantial financial wound, this time, a deliberate and self-inflicted one. It seems that in order to save or salvage something from the Noble debacle, it is first necessary to destroy the Delta financial reserves.

The conversation must have gone like this : “Dear Avanti, you have gate-crashed our game of Monopoly and you have further erred in somehow gaining a piece of the Noble subdivision that we simply must have ! Poor form, poor form indeed. Now chaps, we can do this the easy way or the hard way ! There is no way in this whole wide world we are prepared to pay you the 37 % per annum interest rate that your friends at Gold Band are charging on their part of the mortgage…. That was then, and this is now !! Take it or leave it, our offer is…. not a penny more than…. 34.50 % !!”

Yes readers, Delta in March 2015, paid Avanti $2.19M for its interest in the Noble Investments (NIL) first mortgage. Avanti had paid Gold Band $1.5M for the same interest just 16 months before in November 2013. A gain of $690,000, or 34.50 % per year. Let’s see, only 350 times the rate of inflation. Avanti made out like a bandit, but then, they are a finance company…. and Delta are, well, Delta.

Delta CEO Mr Cameron confirmed that Delta spent $3.3M “strengthening its position”. We now know how that went : $1.2M to Gold Band, $2.19M to Avanti, which all pans out, taking into account a rounding error.
What we do not know is the timing of the $3.3M, but that is not a central issue at the minute.

Readers should bear in mind that if the situation is resolved by June 2016, then the first mortgage of $1.75M lent by Gold Band around 2004, could have spawned the amazing sum of $11.8M, and at least $9.1M. Gold Band and Cup Investments (CIL) will have lent out $1.75M and received $3.1M plus $2.7M received from Avanti and Delta. That is a total of $5.8M. Huge. Delta have paid $3.3M for a part security and if they are charging around the same interest as the others, then their figure will be around $5.5-6M. That is, the first mortgage securities of Gold Band and Delta will consume the first $10M of the mortgagee sale. Not looking good for Delta’s core debt of $11.35M of lower ranked securities….

ODT 18.4.16 front page small [allied.press.co.nz] 1bYour correspondent is desperate to see a Councillor ask for confirmation about this and the Gold Band and Avanti ‘premium’ they paid. Perhaps then the Otago Daily Times might sense that Delta paying $1M plus over the face value to Gold Band and Avanti for part of a first mortgage in an attempt to get a better recovery on their lower ranked securities is News, and not in a good way. Heaven knows they could do with some – Building Consent Delays on the front page – Good Lord what next ! more cat pictures ?
The Wash ?

Your correspondent can’t wait to read the emails around that board decision…. when the Auditor-General releases them. Will there be another email from a Delta Director stating in effect “if the subcommittee agrees then I agree with them?” (As there was for the ill-fated decision to proceed with Luggate).

Next we shall look at the “Strategic” reasons the DCC put forward as compelling reasons for retaining Delta in its report…. Irony and comedy abound….

[ends]

█ For more, enter the term *delta* in the search box at right.

Posted by Elizabeth Kerr

*Image: alliedpress.co.nz – ODT 18.4.16 front page sml

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5 Comments

Filed under Aurora Energy, Business, DCC, DCHL, Delta, Democracy, Dunedin, Economics, Finance, Infrastructure, Media, Name, New Zealand, OAG, Ombudsman, People, Property, Public interest, Site

5 responses to “Delta #EpicFail Noble Subdivision : Avanti Finance —Feeding at the Delta Trough

  1. Calvin Oaten

    The saga of a “death by a thousand cuts” as ‘CD’ drip feeds the details of this, arguably the death rattle of Delta. Just how, between Jacks Point, Luggate and now this worst of all exercise, Delta can survive without massive debt funded support (which can only be at the ratepayers’ door) is difficult to see. Will the right decisions be made? Will heads roll? Can there really be a future for this business? Hard to see, but no doubt there will be a burning of some midnight oil over this one as the blankets are cobbled up.
    Roll on election I say.

  2. Gurglars

    Calvin, I’m sure you’ve deduced that the sorry story will not be publicised to the masses prior to the 2016 election if at all, and the “key” staff at Delta, the directors, and the probably non-existent “managers” who could be/should be keeping an eye on such matters elected or unelected will deny any knowledge of these events, on the basis of the three”wise monkeys”.

    The only truth in this is the simian behaviour.

  3. Hype O'Thermia

    ‘The only truth in this is the simian behaviour.”
    I think I have mentioned before that I do not subscribe to the theory that monkeys result from paying peanuts.
    Looks like a touch of the QEDs was going on, whaddya reckon?

  4. Hype O'Thermia

    The loan sharks that “help” people on minimum wage when the car breaks down and they can’t get to work without it; those truck shops that stop in the poorest parts of town on benefit day selling overpriced goods at exorbitant pay-it-off prices – reading about Delta and the interest its shrewd (“Because we don’t pay peanuts”) business hi-fliers have negotiated reminds me you don’t have to go to Chez Downtrodden on Feckless Crescent to find these sorry pairings of shark and baby seal.

  5. russandbev

    Again, the most interesting thing to note from these insights and information from CD is the total lack of response by the ODT. Of course the editorial staff and/or reporters read What If? and any reporter or journalist should be sniffing out stories to do with the region served by their employer. CD has now provided a huge amount of information about Delta and given the well-documented facts concerning the huge losses when Delta got involved in property speculation at Jacks Point and Luggate, it is clear that Delta have again been well and truly bitten by Yaldhurst. The only thing in possible dispute is by how much and who knew about it and/or didn’t act to prevent the losses to Dunedin ratepayers.

    I can only think of a few reasons that the ODT wouldn’t be seizing on this story. Pressure not to publish from a number of directions would be one and biding their time to make maximum impact would be another, but to ignore information or choosing not to investigate seems like a serious dereliction of duty to bring news to the public’s attention.

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