KEY POINTS:
Dominion Finance, which froze repayments on $276 million owed to 13,000 debenture investors in June, yesterday lurched towards receivership after its trustees rejected the company's recapitalisation plan.
The company's directors said the terms of their proposal were not to the satisfaction of Louise Edwards, of Perpetual Trust, and Graham Miller, of Covenant Trustee Company, the trustees of Dominion's two subsidiaries Dominion Finance Group and North South Finance.
The directors now intended to "promptly seek trustee approval" to present stockholders and the group's banks with a separate restructuring proposal "for an orderly realisation of the company's assets".
The new restructuring proposal would "necessarily involve some immediate write-offs of goodwill and brand value in the company's financial statements".
Those statements, now almost two months overdue, were being finalised.
Edwards, the trustee for Dominion Finance Group, said she and Miller, the trustee for North South, looked closely at the details proposed and held lengthy discussions with the directors.
"However we decided that the proposed capitalisation was not a viable option and would not have been in the best interest of debenture holders. In particular it would not have led to investors securing the best return."
Edwards also said the plan required the support of Dominion's banks, the Bank of Scotland International and ASB Bank.
"That support was not provided."
About 20 per cent of Dominion's $447 million in loans is funded by the banks - $70 million from BOS International and $20 million from ASB.
Edwards and Miller were still working with Dominion's directors and would consider an alternative proposal, although "we reserve our rights around receivership", Edwards added.
Dominion Finance's shares, already trading at a small fraction of their early 2007 highs around $2.40, were hit once again by yesterday's news, closing down 7.5c to 4c, a fall of 65 per cent. Meanwhile market operator NZX yesterday confirmed it was still investigating whether Dominion had complied with continuous disclosure requirements ahead of its June announcement.
NZX's acting head of market supervision, Simon McArley, said in June that the investigation was expected to take a week but yesterday told the Business Herald "the matter is still ongoing and it's going through the process".
McArley said the Securities Commission was "aware of everything we're doing".
The commission declined to comment.
Dominion, whose board includes the chief executive of the Insurance and Savings Institute, Vance Arkinstall, and former head of the Directors Institute Rick Bettle, is a property development lender with 30 to 40 per cent of lending in first mortgages and the balance in second mortgages.
It struck trouble when debenture funding dried up at the same time as the property market slumped.
DOMINION FINANCE
* Owes 13,000 debenture investors $276 million.
* Has frozen repayments of principal and interest.
* Owes Bank of Scotland International $90 million and ASB Bank $20 million.
* Has a loan book of $447 million comprising first and second mortgages on property.
PROVINCIAL PAYOUT FOLLOWS SALE
Provincial Finance receivers have sold the last of the company's loans, allowing them to make a further 8c repayment to investors.
The repayment lifts total returns to 90.5c in the dollar.
Maurice Noone, of PricewaterhouseCoopers, said the loans were sold to an entity associated with Bluestone.
The Australian company has been on the prowl for distressed finance company assets for some time, offering to buy Geneva Finance's loans earlier this year.
Noone said the sale and resulting payment - scheduled for September 12 - took repayments close to the level originally forecast, but two years ahead of expectations.
OPI PACIFIC FINANCE CALLS MEETING
OPI Pacific Finance, formerly MFS Pacific Finance, is to hold another meeting to allow stockholders to vote on whether to accept a new proposal from its troubled Australian shareholder Octaviar.
Octaviar is offering to make Pacific Finance a secured creditor and has made a cash offer to investors of 22.5c in the dollar for secured debenture investors and 15c in the dollar for unsecured note holders.
Investors have been told that if they do not vote yes the company is likely to go into receivership. The meeting will be held on September 8 at Auckland's Ellerslie Convention Centre.
- Tamsyn Parker
