Multi-million debts seal rare stamp dealer's fate

Stanley Gibbons' Guernsey subsidiary goes into administration

INTERNATIONAL INVEST MENT: No stamp of approval for Stanley Gibbons’ failed Guernsey investment vehicle

An unspecified numbers of investors but described as “hundreds” face uncertainty on the news that the Guernsey-registered investment subsidiary of well-known philately company Stanley Gibbons has gone into administration, though the parent company is “ring-fenced” from the fallout.

The subsidiary was a investment scheme that lured investors to purchase “rare” postage stamps on the guarantee of a “buyback” that promised either 75% of the stamps’ presnt market value or 100% of the price that they had paid for them.

The scheme is said to have more than £70m in liabilities, though only £6.5m of that is owed to the parent company.

The subsidiary holds about £12.6m in “philatelic stock”, said the parent company in a statement issued today.

The subsidiary’s “potential liabilities”, said the company, primarily consist of around £54m contingent liabilities relating to the buy-back guarantees, and a further approximate £11 million of liabilities included on its balance sheet.

The £6.5m owed to the parent company would, it said, “rank alongside other
unsecured creditors, mainly consisting of bank debt and payments due to holders of
investment products”.

The AIM-listed investment scheme ceased accepting new clients last year amid concerns over the exposure contained in the 75% buy-back scheme.

One scheme required a minimum deposit of £10,000 for a period of between five and seven years, which would buy between five and seven stamps.

PwC, which has been appointed administrator, said that the first task was to reconcile the stock against the investment portfolios but said that there was “no reason” to expect any discrepancies.

The ‘main story’ is one of reducing liabilities

A source close to the company, speaking to International Investment on condition of anonymity, said that the “main story here” was one of reducing the parent company’s exposure to liabilities as a result of the buy-back guarantee.

It was “no secret”, they said, that the parent company had had a few “tough years’ trading” and developments should be seen in that light.

“At the end of the day,” they pointed out, “this is not a Ponzi scheme, or even an investment fund where the money has disappeared, leaving investors high and dry.

“Anyone who invested in the scheme will still be holding their stock, and actually, over the past few years, if anything the value of rare stamps has gone up, not down, so there is every chance of a good outcome.

“This was marketed as a long-term hold and nothing has happened that will change that.”

When pressed, they accepted that problems would arise for investors that wished to cash in, not least because the sudden appearance of a large number of rare stamps at auction “could, not will” have some downward influence on their value, “though that was a hypothetical scenario.”

Parent company ‘bullish’ about its future

The parent company, which has existed since 1856,  was bullish about its long-term prospects, though it accepted that this was a trying period for it.

While current trading remained “subdued”, it said, it was in default under its banking facilities. However, it said that it was “in constructive dialogue with the bank in relation to its ongoing financing”.

It announced that it had appointed Guy Croton as managing director of philately.

“Guy is well respected,” said the company, “following a 22-year career in the industry, the last 15 years at Spink, latterly as head of the philatelic division.

Source: http://www.internationalinvestment.net/products/investments/no-stamp-approval-stanley-gibbons-failed-guernsey-investment-vehicle/