KEY POINTS:
Stricken finance company Property Finance Group says it has come up with a restructuring plan in which investors will be paid both their principal and interest.
Property Finance will seek approval for the plan from its trustee today. The company's NZAX listed shares were suspended on Friday after market operator NZX wrote to it and every other listed finance company seeking confirmation they were complying with disclosure rules.
Yesterday, all 15 except Property Finance, had replied with assurances they were complying with the rules. Most also gave reassurances as to their financial position.
Property Finance owes about 4000 debenture stock investors approximately $82 million. Management said it had decided to suspend trade in its shares after its cash flow dried up because of difficulties in selling the mortgage backed securities used to fund its $630 million loan book. In a statement yesterday, the Christchurch-based company's managing director Darryl Queen said discussions with advisers over the weekend had yielded a restructuring plan which would be presented to its trustee, Covenant Trustee Company, today for consideration.
"The company remains confident that with a restructure it can eventually provide debenture holders with full repayment of principal together with interest," said Queen. That would included interest on principal where payment was deferred.
"We are very comfortable the restructuring plan that we've got is the best one that we can develop and addresses the fundamental problem we have," Queen told the Business Herald. That problem was a "a timing mismatch" between its assets and liabilities. Should the plan not be approved by Covenant's Graham Miller, Queen said there were other options apart from receivership the company would consider.
Meanwhile, in confirming it had received responses from all listed finance companies, NZX said it didn't have specific cause to be concerned that companies were not complying.
Listed finance companies argue NZX's continuous disclosure regime means they are far more transparent and accountable to investors than unlisted companies.
"We've found it difficult to show that differentiation," said Dominion Finance chief executive Paul Cropp.
