Blue Chip Dumps Ailing Arm

Stuff.co.nz:

Structured residential property group Blue Chip Financial Solutions has jettisoned the operations of its New Zealand business after racking up a $2.6 million June half-year loss.

Though the company has continually painted a bright picture of its performance it has admitted it has legacy issues in New Zealand that are dragging it down.

It also warned in an ASX announcement on Monday that quarantining the New Zealand business into a master franchise, to be be run by the same management it has had until now, is not without risk.

It said the risk was the management of the master franchisee might be overburdened.

The franchise company, still publicly unnamed, has to deliver to Australian-listed Blue Chip a $20 million franchise fee each year for the next 3 years through the sale of at least 1000 properties annually.

It also has to sort out a raft of problems that have been on Blue Chip’s books, including recovering lost rental income, cutting overheads and dealing with related party transactions.