KEY POINTS:
After weeks of delays by Dominion Finance Group's management in coming up with a repayment plan for investors, trustee Louise Edwards' patience finally ran out yesterday and she called in the receivers.
Spurred by Edward's announcement, Graham Miller, trustee of DFG's sister company North South Finance, said he would allow the company's repayment plan to go before his investors.
Edwards of Perpetual Trust early yesterday said she had appointed Rod Pardington and Barry Jordan of Deloitte as receivers to DFG following an extensive review of the company.
"As part of this decision, we considered a wind-down proposal presented by the company. However, in the case of Dominion Finance Group, we consider receivership to be the preferable course of action as opposed to other alternatives such as a company managed wind-down under a moratorium.
"In particular, debenture holders in Dominion Finance Group will benefit from the statutory powers of receivers to ensure their interests are best protected."
DFG owes 6000 investors $224 million while North South owes about $50 million.
Two weeks ago Edwards told the Business Herald she was becoming frustrated by ongoing delays in management's delivery of a repayment plan.
As late as Tuesday evening she reiterated her frustration at delays in the provision of further relevant information.
Edwards refused to go into details of her decision yesterday other than to say: "We believe receivership is a tried and tested clear-cut route."
The moratorium, as suggested by DFG's management, "is a complex cumbersome and really, a largely untested arrangement that has to operate over a number of years in unpredictable circumstances".
However, Miller, of Covenant Trustee Company, yesterday said he had agreed to allow North South's debenture holders to consider "an orderly supervised wind down" of the company. A key requirement was that the process was supervised by insolvency specialists KordaMentha.
All of North South's board, bar independent directors Rick Bettle - who is also chairman of North South and the group - and Vance Arkinstall, would resign.
North South investors should receive details of the moratorium proposal at least two weeks before meeting to vote later this month or in early October.
Bettle said the company's board and management put "the same plans to both trustees and one's chosen one route and the other's chosen the other".
"To be fair each is a trustee of a different company, they have different loan profiles and so on and they have to make their decision, nevertheless we do not agree with the Perpetual decision."
North South, which Dominion bought in late 2005 for $40 million in cash and shares has a much smaller loan book than its sister company, made up mostly of first mortgages. DFG's loan book however is 60 to 70 per cent second or subsequent mortgages.
Dominion froze repayments to investors in June after its debenture reinvestment rate fell to just 15 per cent at the same time as property companies it had lent to struggled to make payments.
A restructuring plan was then rejected by trustees when a $43 million injection of new equity fell though, the company said it had made a loss of $108 million in the March year. Dominion Finance Holdings shares yesterday lost a further 0.8c of their remaining value to close at 1.2c each.
