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Shares in trouble-plagued Dominion Finance went into freefall yesterday as the company called in the experts to help with its proposal to temporarily freeze repayments to investors.
The NZX declined to extend the trading halt, and Dominion Finance shares slumped from 50c to 10c - a fall of 80 per cent - shortly after trading resumed at 10am. The share price rallied slightly to close at 12c - a long way from a record high of $2.28 in May 2007.
It came as debenture holders in company subsidiaries North South Finance and Dominion Finance told of non-repayments of matured investments - something legal experts say is in breach of the terms of the trust deed.
Dominion Finance announced that it had enlisted financial advice and receivership specialists Korda Mentha and law firm Chapman Tripp to assist with its moratorium proposal.
It had said on Tuesday that it was considering suspending payments to debenture holders after becoming concerned about the liquidity of the two subsidiary companies.
"As a practical matter, the commercial terms of the moratorium will take some weeks to develop, as a number of stakeholders need to be consulted including trustees, banks, shareholders and potential equity providers," the company said.
Dominion Finance had requested the NZX to extend the trading halt, but was declined, as it regarded the market as "fully and equally informed".
"NZX should not restrict Dominion Finance security holders the ability to trade their securities," NZX said.
"NZX considered that the existence of the serious sanctions in the Securities Markets Act for insider trading would act as a sufficient deterrent to any person tempted to trade on the basis of confidential information."
