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Troubled investment company MFS New Zealand said yesterday it would ask investors in its finance arm MFS Pacific Finance to approve a moratorium on interest payments while the company conducted "an orderly realisation of its loans and investments".
It said it would seek a funding agreement with Australian parent MFS Ltd, including an initial cash payment from the sale of 65 per cent of MFS' Stella Group tourism business.
"The amount of that initial payment and the process for subsequent payments is currently being negotiated and will be detailed in the moratorium documentation provided to investors."
MFS NZ hopes to hold an investor meeting in early March.
It believed the plan "will result in significantly improved returns for investors than may otherwise have been available." More than 12,000 New Zealand investors have put $325 million into MFS Pacific but the company has defaulted on interest payments to some investors.
In November finance company Geneva made a similar move, with its investors approving a six-month freeze on repayments of principal.
Perpetual Trust - the trustee company for MFS Pacific Finance - would be undertaking a review of moratorium proposals, before they were put to investors for their approval.
On Friday, parent MFS Ltd sold a controlling interest in its Stella Group tourism business so it could meet debt repayment deadlines.
A trading suspension which began on January 31 is to remain in place until MFS NZ can provide investors and the market with final documentation as to its position.
- NZPA
