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MFS New Zealand has still not reached an agreement with its major Australian shareholder MFS over how much it will receive to help pay back more than $300 million owed to debenture holders in its subsidiary MFS Pacific Finance.
MFS Pacific Finance told its 12,000 debenture holders last month it expected to finalise negotiations with MFS by Friday to allow it to put together a moratorium proposal for a vote by the end of March. But yesterday MFS New Zealand and MFS said they were still in talks.
"Discussions are continuing and announcements will be made as soon as possible," a spokesman for MFS New Zealand said.
Louise Edwards, chief executive of Perpetual Trust, MFS New Zealand's trustee, said she had received initial documentation from the company late last week but did not know when the final proposal would be ready to take to debenture holders.
"For investors it's obviously quite frustrating. But it is quite a complicated process in terms of documentation."
Edwards said the company was working hard to put the proposal together.
MFS Pacific Finance defaulted on $27 million worth of debenture payments at the end of January after MFS failed to come through with promised financial backing.
MFS has a put option agreement with the New Zealand company which means it is liable for any overdue debts of MFS Pacific Finance.
But the Australian company has been in financial trouble since January when its share price fell 70 per cent in one day following investor concerns over debt levels.
Since then it has been selling off assets including a majority stake in its Stella Group tourism business to pay down loans.
MFS has said it will set aside money to meet its commitment to MFS Pacific Finance, an arrangement which MFS New Zealand has said is a critical component in its moratorium proposal.
However it seems unlikely that the company will be able to meet its March deadline with Easter holidays on the horizon as investors must be given 10 working days to read over the documents before the meeting is held.
Meanwhile, MFS' tourism arm MFS Living and Leisure has been suspended from the New Zealand stock exchange because it failed to meet Friday's deadline to post its preliminary six monthly reports.
