Geneva Finance vote 'a no-brainer'

Geneva Finance stakeholders would be "mad" not to vote in favour of a proposal which delays their capital repayments and allows the finance company to continue operating in moratorium, according to the Shareholders Association.

Geneva's 3000 debenture and noteholder investors have the chance to vote in person today on a new capital structure at a meeting in Auckland.

The consumer finance company renegotiated a new agreement with its bank funders Bank of Scotland International (Australia) last month and must seek approval from investors to allow it to go ahead.

If approved the deal will let BoS reduce the level of its lending facility from $35 million to $30 million with six monthly repayments due until it is fully repaid in March 2015.

Debentureholders, who have received 50 per cent of their capital back, will have to wait longer for full repayment. They were to be paid back by September 2012 but will have to wait until March 2015.

Noteholders will also have to wait until April 2015 to receive a forecasted 85 per cent of their money back.

Investors have been told the company is likely to go into receivership if they don't vote in favour of the proposal.

John Hawkins of the New Zealand Shareholders Association said its view was that the deal was a "no brainer".

"You are mad if you don't [vote for it], he said.

The positive approach is a turnaround for the association which 18 months ago was calling for three of Geneva's directors to be replaced.

Hawkins said that was now "water under the bridge". "At the time we had some information that ultimately proved to be incorrect and was provided by a disaffected party."

Hawkins said Geneva was one of the few finance companies which had continued to pay investors' interest during its moratorium.

Debenture holders have received 11 per cent per annum while noteholders, who haven't been paid back any capital yet, have been getting 13 per cent.

Hawkins said he believed the refinancing had only happened because of a change in ownership with BoS.

The company was last year bought out by Britain's Lloyds TSB Bank.

The proposal must get 75 per cent approval from both debenture holders and noteholders to pass.

Hawkins said if the company was forced into receivership debenture holders would probably get some more money but noteholders would likely get nothing.

Geneva Finance is not covered under the Government's deposit guarantee scheme because it was in moratorium by the time the scheme came into place.

Last month it was down-graded from CCC to CC by rating agency Standard & Poor's because of the restructure.

Geneva froze $142 million of investors money in October 2007 and had a six-month full moratorium before reaching a share for debt equity deal with investors to partially list on the stock exchange.

Under the finance company's restructuring plan, 15 per cent of the company's $98.42 million in debenture holders' funds and 55 per cent of $11.5 million in note holders' funds were converted into new shares at a rate of one share for 36.49c. The company traded at 15c when it first listed but on Friday closed at 5c per share.

THE MEETING

Where: Waipuna Hotel and Conference Centre, Mt Wellington.
When: Starts at 2.30pm.