Mahogany investors to start receiving payments

Perpetual Trustee Company has reached a settlement with Lehman Brothers Special Financing that will see more than 1,000 investors in Mahogany Capital credit-linked notes receive payments in May 2011.

The agreement will affect over 1,000 retail investors in Australia, New Zealand and Papua New Guinea. The settlement terms mean that Perpetual, which acts as trustee, cannot disclose financial details and settlement amounts for six months. However, Perpetual stated it expected that Mahogany investors would receive one or more payments in late May or early June next year.

Perpetual stated that it believed the agreement worked “in the collective best interests” of Mahogany investors and would deliver “concrete outcomes”.

The settlement relates to $125 million worth of Mahogany notes sold to retail investors between 2005 and 2007 by Grange Securities, which is now owned by Lehman Brothers Holdings. Mahogany used the money to purchase credit-linked notes issued by Saphir Finance, which in turn used the proceeds of the notes to buy collateral to secure its obligations under the credit default swap agreement with Lehman Brothers Special Financing and under the relevant credit-linked notes sold to Mahogany. Perpetual stated that Lehman Brothers Holdings guaranteed the obligations of Lehman Brothers Special Financing under the credit default swap agreement.