KEY POINTS:
The Consumers Institute said yesterday it was concerned at the lack of information for investors provided by Geneva Finance ahead of its meeting on Monday. The institute has been denied representation at the meeting on behalf of investors unable to attend, or who did not properly understand the situation.
At the meeting next week, the board and management will seek approval for a loan moratorium as they struggle with a lack of cash and try to stabilise the company's position.
Geneva said last week that it was closing its branches and laying off staff, but would continue to lend.
"We wanted to put some questions to Geneva about the lack of disclosure of the company's financial position to investors. It declined, saying the meeting was private between the company and its investors," institute chief executive Sue Chetwin said.
Questions the institute wanted to ask included: are shareholders tipping in more cash to assist the company; what is the guarantee investors will get their money back in six months; and why is there such a lack of information to investors compared with details available for management and bankers?
Those attending Monday's meeting should be looking for strong evidence that Geneva could trade its way out of difficulty, Chetwin said.
Geneva defaulted on debenture repayments last month.
Rating agency Standard & Poor's has lowered its ratings on Geneva to the default-level D from B-minus.
If investors rejected the moratorium, Geneva has said its trustee, Covenant Trustees, would proceed with enforcement action.
Ten finance companies have collapsed in the past 18 months, including seven this year as the main local effect of a global credit crunch.
- NZPA
