Hanover Finance's shareholders, Mark Hotchin and Eric Watson, have announced they are close to proposing a finalised debt restructure plan that would see them contribute "shareholder support" of up to NZ$96 million in cash and property. They said they believed this plan would return 100 cents in the dollar to first ranking debenture holders. (Updated to include details from Hotchin) They said the plan would be finalised and presented to trustees Guardian Trust soon, before being mailed to investors in early October for a late October vote. Hotchin and Watson did not specify in the statement what proportions of the NZ$96 million were cash and property or debt and equity. They also did not specify the nature of any debt restructure or rescheduling that would be borne by debenture holders. In later interviews with TVNZ, Goodreturns and the NZHerald Hotchin said the initial injection would be NZ$36 million in cash plus NZ$40 million in property, with an option to inject a further NZ$20 million if required. Hotchin has yet to return a call from interest.co.nz. The full text of the statement from Hanover is below.
Mark Hotchin and Eric Watson, the shareholders of Hanover Finance Limited, United Finance Limited and Hanover Capital Limited today confirmed that, after working closely with company management, the trustees and advisors, a detailed debt restructure proposal is expected to be finalised and presented to the trustees soon. Once approved, it is expected this will be mailed to investors in early October. It is anticipated that an investor meeting to vote on the proposal will be held in late October. The debt restructure proposal will include shareholder support of up to $96 million, to be provided in cash and property assets, in addition to the existing total equity in Hanover Finance of $64.9 million as at the year ended 30 June 2008. All equity ranks behind the secured debenture holders funds. Mark Hotchin said today that the package is a significant indication of the shareholders' willingness to stand behind the business and achieve the best outcome for investors. "We want to see Hanover in a position where it continues to trade through this difficult part of the cycle, and we believe the proposal, which puts a priority on returning capital, will return 100 cents in the dollar to first ranking debenture holders". "Certain terms of the restructure are still being finalised with the shareholders, trustees and their advisers. Completion of the proposal is dependant on those terms being completed satisfactorily, however the economics of the proposal described above will not change," he says. "In this context we are continuing to work hard on finalizing the plan for investors to vote on. In the interim we are mindful of the patience shown by all those affected by the situation and we wish to thank them for this".