$7.25 million cash-call for Nido investors
Investors facing big losses in the troubled Nido store syndicate have been asked to tip in $2.25 million more by December 16 to prevent a mortgagee sale.
A further $5m of capital would need to be raised by February 28, property syndicator Maat Group told investors.
Property investors, including many retirees, sank around $35m into a syndicate to build the giant 27,000 square-metre Nido store in Auckland but are expecting to make heavy losses after both construction company Vijay Holdings, and tenant Magsons Hardware (trading as Nido) went bust.
Nido went into receivership on December 4 after failing to fulfil its founder’s dream of becoming the South Pacific’s answer to Ikea, which investors hope will make an offer for the giant retail site.
Prospective tenants were being sought, and interest had been ‘‘encouraging’’, Maat told investors. But the lender, Pearlfisher, which provided $28m of development funding, planned to force a mortgagee sale, unless some of the money was paid back quickly.
‘‘Pearlfisher have made it clear that it will sell the property as a mortgagee sale after 28 February 2021 unless they are paid down in the sums of: $2.25m by 16 December and a further $5m by 28 February,’’ Maat said.
One option was to sell the property in conjunction with Pearlfisher but the property might realise sufficient capital to repay Pearlfisher only, and investors would receive ‘‘far less than the value of their investment’’, Maat said.
‘‘The second option, and we believe the best outcome for investors, is to not sell the building and take steps to re-tenant it and restore value,’’ it said. ‘‘If that is the preferred approach of investors, it will require a further injection of capital to repay Pearlfisher in whole or in part. To be clear, either further capital is raised from current investors as set out above or Pearlfisher will sell the building from 28th February, repay their debt (approximately $28m) from the proceeds and the balance after sales costs will be distributed to investors.’’
More money would be needed later, Maat said, signalling some would be funded by debt, and some by another offer of shares.
‘‘In addition, it is planned that further capital be raised to refinance the balance of the Pearlfisher loan. This is expected to be by way of debt and equity funding. Financing costs would be significantly reduced further,’’ investors were told.
Pearlfisher was currently earning interest of 16 per cent on the $28m loan, Maat said.
Since the liquidation of Vijay Holdings on November 6, Maat had been working with Pearlfisher to re-engage contractors to complete the building, and it now believed the store to be finished by March 2021.
The Nido concept was created by businessman Vinod Kumar.
Kumar was the sole director of the construction company Vijay Holdings, which was developing the Nido store until it was put into liquidation on November 6.
Kumar, who was previously a Mitre 10 Mega franchise-holder, was also the sole director of Magsons Investments, which sold the land to the syndicate. He was also the sole director of Magsons Hardware trading as Nido.