Goldcorp in receivership

Press, 12 July 1988, Page 25

Goldcorp in receivership

Goldcorp Holdings, the publicly-listed bullion dealer and property developer, has gone into receivership. The directors requested the Bank of New Zealand to appoint receivers into one of its subsidiaries, Goldcorp Exchange, Ltd, and, “to protect the interests of all parties,” the bank decided to also appoint receivers to two other subsidiaries, Goldcorp Equities and Andrews and Stevens, as well as the parent company.

Another operating subsidiary, Goldcorp Futures, has been suspended from operating on the New Zealand Futures Exchange. Mr Peter Coote has been appointed receiver of Goldcorp Holdings, and Mr Bryan Kensington and Mr John Cregten, of

Arthur Young, have been appointed receivers of Goldcorp Exchange, Goldcorp Equities, and Andrews and Stevens. The decision had become necessary because of continuing losses in Goldcorp Exchange. Various moves over the last few months to establish satisfactory control in the Gold Division and make management more effective had improved the position considerably, but the losses had not been eliminated and the heavy previous losses had destroyed the liquidity of the gold division, and affected the whole group. The company had previously commenced action in the High Court against the vendors and the auditors of Goldcorp Exchange (formerly Auckland Coin and Bullion Exchange) for damage suf-

fered as a result of errors relating to profitability in the accounts upon which the flotation of Goldcorp Holdings was based. Goldcorp Holdings was formed in 1986 to purchase two businesses which have since been consolidated into the three main subsidiaries — Goldcorp Exchange, Goldcorp Properties, and Goldcorp Equities.

The businesses were purchased for $2O million — satisfied by issue of 20 million 50c shares and four million options exercisable before March 31, 1989. The subsidiary Goldcorp Properties has not been placed in receivership; the bank and the directors intend that the property portfolio be maintained and improved. When the company was floated, the directors

hoped that profits from the gold division would provide cashflow for the property division.

Instead the gold division had suffered heavy losses both in its trading division and as a result of its purchase of a precious metals chain making plant and gold mining interests.

The property portfolio had been the only successful activity, but could not in the present market generate sufficient profit and cashflow to support the gold divisions through a restructuring period.

The property activities were soundly-based, and would continue despite Goldcorp Properties being the largest unsecured creditor of Goldcorp Exchange, a company statement said.