Cru defends soft loans as investments

Cru has defended borrowing £3.2 million in soft loans from some of the ‘cell’ companies that make up the Arch Cru fund range, arguing the arrangement fitted in the funds’ private finance investment remit.

Cru Investment Management managing director Marc Ainscough said that Cru was ‘not in default on the loan’ and argued that 'interest' was continuing to be paid on it. The loans are interest-free according to Cru's accounts, but carry a redemption premium that Ainscough said is paid off in installments. The latest accounts show the premium to be just over £200,000 on the £3.2 million loan.

Ainscough said the terms of the deal were similar to those under which Arch has struck other private finance deals.

He also stuck by Cru’s decision not to inform investors of the arrangement, arguing that as with all of the fund range’s other private finance deals, details could not be disclosed.

‘All private finance deals are by their very nature private. I think you are very aware that one of the issues that has been addressed as a concern about the Arch Cru fund range was the issue of transparency,’ he said.

‘None of the underlying loans were declared. None of the underlying private equity holdings were declared. There are a number of reasons for that, some of which Arch have articulated.’

Citywire was excluded from yesterday's Cru press conference, but Ainscough agreed to speak to Citywire after the event.

Ainscough said that in the event of a failure of the Cru business, the fact the loans are secured against the distribution agreement for the Cru funds would help to protect investors’ money.

‘The security, like all securities, is there to be seized by the lender, and having secured that security they will then make sure any outstanding capital is repaid,’ he said.

He said the loan was taken out as part of Cru’s expansion plans, and defended the terms under which it was taken.