Mark Hotchin

Mark Hotchin

Mark Stephen Hotchin (born 25 December 1958)[1] is a New Zealand property developer and financier. He was a director of the Hanover Group which owned a number of finance companies including Hanover Finance, United Finance, Nationwide Finance and FAI Finance. The Hanover Group[2] also had interests in property and was responsible for developing Matarangi Beach Estates and golf course, and acquired completed lots at the Jacks Point property sub-division[3] in Queenstown. The Group also had property and finance interests in Australia.[4]

With Eric Watson he bought 30 per cent of Elders Finance in 1999 and in December that year bought it outright. Elders Finance became the core of what would become Hanover Finance. Two years on, their other finance and investment assets (Nationwide Finance, Leasing Solutions, Elders Home Loans and Hanover Securities) were rolled in to create Hanover Group with reported assets of $650m.[1]

As with many countries participating in the global market, New Zealand experienced the flow-on effect of the financial collapse of large international finance companies including Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and ING.[5] Furthermore the nervous reaction of investors in the wake of these larger collapses created further tension and a lowering of overall confidence in the market. As at May 2010, approximately 50 finance companies in New Zealand were marked as failed.[6]

Different to many other finance companies Hanover Finance, United Finance and Hanover Capital applied to the trustee for a repayment freeze or moratorium rather than a receivership.[7] FAI Finance continued to trade and was wound up in 2010.

After the repayment freeze Hanover prepared a debt repayment plan, offering to repay investors over a 5 year period. As part of the plan, Hotchin and Watson pledged $96 million of assets.[7] These assets fell in value as property prices declined.[8]

Contents

Early life and business

Mark Hotchin was born in Auckland, and attended Roman Catholic schools, St Joseph's Primary School in Onehunga, Marcellin College and St Paul's College.[1] His father owned a joinery factory, and was also involved with property development.[9] When Mark Hotchin left school he worked in his father's factory. His first business was a sports goods store, which got into financial trouble and was rescued by his father.[1] Hotchin first bought and subdivided a house for profit in 1982 when he was 23 years old. He then did an increasing number of such subdivisions. In the 1990s, he bought Regency Court in the Auckland suburb of Saint Heliers for $6 million, selling it later for $10 million.[1] He bought the successful taxi company Corporate Cabs, expanded it and sold it in 1999 to former Skellerup Group boss Murray Bolton.[10] He bought Matarangi Beach Estates in 1995.[1]

Finance companies

Hotchin's property development work depended on borrowing from finance companies and banks. Hotchin saw an opportunity to lend to developers like himself and bridge the gap between bank funding and equity funding. This coincided with a boom in the housing and construction market in NZ throughout the early part of the 2000s.

Hotchin and business partner Eric Watson bought Elders Finance in 1999. Elders, and a number of other finance companies, were brought together to create Hanover Group.[1] With $650 million in assets,[1] this was New Zealand's third largest finance company at the time. In 2007, Forbes listed Hotchin and Watson as the 33rd and 34th richest people in New Zealand and Australia.[11]

Hotchin's interests ranged outside the traditional finance company model. In 2003 Hotchin through the Hanover Group bought a 10% stake in Tower,[12] a large fund management and insurance business. Hanover wanted a better deal for investors and forced Tower and owners GPG to review the capital raising and underwrite deal they had agreed.

In 2007 Hanover Group made an after tax profit of $105m. Controversially Hanover Finance paid NZ$45.5 million in dividends to Hotchin and Watson in the year ending 30 June 2008.[13][14] Much of these dividends were then reinvested back into the company to reduce related party transactions, which at the time were around 14% of the loan book.

As a result of the continuing worsening global financial crisis in July 2008 Hanover Finance and United Finance froze repayments of NZ$554 million owed to 36,500 investors.[15] After a vote over 85% of investors agreed to a debt repayment plan for the return of their capital over a 5 year time scale, predicated on the recovery of the New Zealand property market. Hotchin and Watson pledged a property, benefits and cash package worth up to $96m[16] to investors as part of the deal. By November 2009 accountancy firm PwC estimated that the package had fallen in value to between $36 million and $56 million, due to a fall in property prices.[8] Over the first year of the debt repayment plan, six cents in the dollar was repaid to investors, however the property market had continued to worsen and it appeared the company was heading for receivership.[8]

In 2009 Hanover was approached by Allied Farmers to buy the assets of Hanover Finance and United Finance, effectively held in limbo by the repayment plan.[8] In December 2009 Hanover Group debenture holders, note holders and bond holders were given another opportunity to vote for receivership or for the new plan with Allied.[17] 75% voted in favour of swapping their debentures, notes and bonds for shares in Allied Farmers Limited. This transaction resulted in Allied Farmers assuming the net asset position of the Hanover Group finance companies.

Allied Farmers put their finance company Allied Nationwide into receivership in 20 August 2010 and as at March 2011 shares in were worth only a fraction of what they were traded for.[18]

Private life

Mark and wife Amanda have been keen supporters of charities through their connection with the New Zealand Warriors. Key charity partners are Kidz First Children’s Hospital, DebRA New Zealand and Surf Life Saving – Northern Region, as well as the Warriors in-house charity League in Libraries.

Whilst being a controversial figure in NZ, Hotchin has been targeted by beer and pizza companies and even developers hoping to stave off recovery of assets by increasingly bizarre stunts including billboards driven outside his house.[19]

Amongst the most controversial of his New Zealand assets is a still unfinished house on the upmarket Paritai Drive. This house has been the target of much of the public's ill-feeling towards Hotchin. In 2009, pizza company Hell Pizza set up a large billboard on a trailer outside the house to advertise pizza based on the seven deadly sins,[20] to advertise pizzas based on the seven deadly sins.

As a result of a hate campaign by the media Hotchin decided to sue the country's biggest tabloid newspaper the New Zealand Herald for aggravated and punitive damages.[21]

Hotchin's New Zealand assets were frozen by the High Court, following an application by the Securities Commission.[22] But a decision by the Court to have the order over turned has been ruled on but not made public.[23]

Hotchin is co-owner with Eric Watson of the New Zealand Warriors.

References

  1. ^ a b c d e f g h Taylor, Phil (2011-02-19). "Mark Hotchin: The man behind the money". New Zealand Herald. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10707295. 
  2. ^ "Net profit up 20% for Hanover Finance". Scoop. 2007-03-11. http://www.scoop.co.nz/stories/BU0703/S00202.htm. 
  3. ^ Hutching, Chris (2008-12-12). "Spring thaw at Jacks Point?". National Business Review. http://www.nbr.co.nz/article/spring-thaw-jacks-point-38941. 
  4. ^ Freeman, Glenn (2006-09-14). "Hanover profit linked with boosted Australian loan book". Money Management. http://www.moneymanagement.com.au/news/Hanover-profit-linked-with-boosted-Australian-loan. 
  5. ^ Parker, Tamsyn (2008-12-11). "ING to wind up $500m in funds". New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10547507. 
  6. ^ "Deep freeze list – finance industry failures". Interest.co.nz. http://www.interest.co.nz/saving/deep-freeze-list. Retrieved 2011-05-09. 
  7. ^ a b "Hanover plan too optimistic - experts". The Dominion Post. 2011-11-21. http://www.stuff.co.nz/business/727550. 
  8. ^ a b c d "Allied's Hanover deal better than receivership". Good Returns. 2009-11-30. http://www.goodreturns.co.nz/article/976496005/allied-s-hanover-deal-better-than-receivership.html. 
  9. ^ Bennett, Adam (2008-08-09). "Exhilarating ride may finally be over". New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10526049. Retrieved 2010-12-21. 
  10. ^ "Corporate cabbie hails a ride in taxi enterprise". New Zealand Herald. 1999-03-19. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=3920. Retrieved 2010-12-21. 
  11. ^ Doebele, Justin; Allison Fass (2007-02-12). "Australia and New Zealand's 40 richest". Forbes. http://www.forbes.com/global/2007/0212/037.html. 
  12. ^ "Hanover increases Tower stake and ante". ShareChat.co.nz. 2003-07-14. http://www.sharechat.co.nz/article/964f7fcf/hanover-increases-tower-stake-and-ante.html. 
  13. ^ O'Sullivan, Fran (2010-08-18). "Still waiting for answers on $45 million". New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10666830. Retrieved 2011-03-06. 
  14. ^ Gaynor, Brian (2011-03-04). "Message to Hotchin - own up or shut up". New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10710148. Retrieved 2011-03-06. 
  15. ^ Macalister, Philip (2008-11-20). "Hanover details plans". Good Returns. http://www.goodreturns.co.nz/article/976494630/hanover-details-plans.html. 
  16. ^ Slade, Maria (2008-12-06). "I feel a moral obligation to help - Hotchin". New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10546795. 
  17. ^ Gay, Edward (2009-12-16). "Hanover investors look to future after yes vote". New Zealand Herald. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10615894. 
  18. ^ Hunter, Tim (2010-08-20). "Receivers appointed to Allied Nationwide Finance". Dominion Post. http://www.stuff.co.nz/business/industries/4045383/receivers-appointed-to-allied-nationwide-finance. 
  19. ^ Fahy, Ben (2009-11-24). "Hanover Finance and Chapman Tripp go to Hell". New Zealand Marketing Magazine. http://www.stoppress.co.nz/news/2009/11/chapman-tripp-go-to-hell/. 
  20. ^ Mace, William (2009-11-25). "Hell Pizza hath no fury like a financier scorned". Stuff.co.nz. http://www.stuff.co.nz/business/industries/3093981/Hell-Pizza-hath-no-fury-like-a-financier-scorned. 
  21. ^ McManus, Jenni (2011-05-05). "Hotchin sues Herald over column". Stuff.co.nz. http://www.stuff.co.nz/business/money/4966981/Hotchin-sues-Herald-over-column. 
  22. ^ "Hotchin assets frozen by High Court". New Zealand Herald. 2010-12-15. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10694484. 
  23. ^ McManus, Jenni (2011-05-09). "Secret ruling on Hotchin assets". Stuff.co.nz. http://www.stuff.co.nz/business/money/4979084/Secret-ruling-on-Hotchin-assets. 

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