KEY POINTS:
In the aftermath of Lombard Finance's failure, New Zealand Exchange has moved to improve the information disclosed by the remaining handful of listed finance companies.
The market operator and regulator said that "in the current environment" it considered finance firms' monthly reinvestment rates, debt servicing obligations, expected monthly income and loan concentration "material information" that should be disclosed to the market.
Unless they explain by the close of trade today why they do not consider this information material, they will be required to disclose it by the end of each month beginning on April 30.
NZX specified that information on loan concentration should detail the proportion of a firms' overall lending to its biggest five borrowers, "and any significant connections" between them.
This month, the Herald reported that the loan book of Lombard Finance and Investments, a subsidiary of the listed Lombard Group, had become highly concentrated. The information was in an amendment to the company's prospectus filed to the Companies Office last Christmas Eve, but despite its apparent significance, Lombard's parent did not disclose it to the market.
After Lombard Finance's receivership on April 10, NZX confirmed it was investigating the company's compliance with disclosure rules.
Andrew Walker, chief executive of Dorchester Pacific Group, one of a handful of remaining listed finance companies, said the request from NZX was clearly a kneejerk reaction to Lombard's failure and "a rather annoying hindrance to our business".
He said it would divert management from core tasks "to come up with answers to questions which by definition you should already be in compliance with".
NZX head of market supervision Elaine Campbell denied that the request was a reaction to Lombard. "This is a sector that has been seeing troubles now for some lengthy period of time."
Under the present conditions the information NZX was asking for was clearly material in that it was "what a reasonable person would expect to have an effect on the price of securities".
"This is what we believe these companies should be disclosing and we have given them the opportunity to dispute that."
NZX's beefed-up approach to disclosure applies to listed finance companies or companies with material finance company subsidiaries. It would apply to Cynotech Holdings, Dominion Finance, Dorchester Pacific Group, Marac Finance's owner, Pyne Gould Corporation, and New Zealand Finance.
Listed finance companies or finance company subsidiaries of listed companies which have struck difficulties in the past two years are Lombard, OPI Pacific Finance -formerly known as MFS Pacific Finance, and Nathans Finance.
OPI Pacific Finance is not in receivership and is seeking a moratorium from investors. Campbell said its parent company was expected to comply with NZX's request.
Meanwhile, Lombard Group chief executive Michael Reeves yesterday said no value would be attributed to Lombard Finance in the group'scoming March year results. The value of $2 million in Lombard Finance debenture stock held by the group would be assessed after an initial receivers' report.
Reeves also said that Lombard Group has sold its Maestro online insurance and mortgage facilitation business to the company's general manager, and Lombard's board was reviewing the group's operations in the light of the Lombard Finance receivership.
WHAT NZX WANTS
* Listed finance company information - NZX deems the following "material":
* The reinvestment rate of investors for the month to date.
* The debt being serviced for the month to date.
* The expected income for the following month.
* The concentration of the loan book, specifically the proportion of the overall loan book in the top five borrowers and any significant connections between the top five borrowers such that the failure of one could impact on the other.
