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Geneva Finance says it has repaid investors, including BOS, more than NZ$100 mln

Geneva Finance says it has repaid investors, including BOS, more than NZ$100 mln

Geneva Finance says it has paid back 76% of the money owed to its investors, including bank BOS International (Australia) Ltd, since the consumer lender entered a moratorium in November 2007 owing a net NZ$132.4 million to investors.

Geneva says as of September 30 it had paid back NZ$100.7 million of investor principal and interest repayments. This includes interest payments to investors, including BOS, of NZ$28.5 million at an average interest rate of 10.75%, and principal repayments to debenture holders totaling NZ$56.7 million.

The repayments make Geneva one of best returning finance companies to enter repayment moratoriums, receiverships or liquidations in the past three or four years, excluding those covered by the Crown retail deposit guarantee scheme. Provincial Finance has returned 92.2% of investors’ money excluding interest and Beneficial Finance, which entered a moratorium in October 2007, has repaid 100% of the NZ$13.8 million it owed, including interest. See our Deep Freeze list for more detail.

Geneva investors did, however, approve a capital reconstruction plan in April 2008 that saw share capital increase by NZ$22.7 million through debt conversion by debentureholders and noteholders, plus additional cash subscriptions.

And in March this year Geneva investors voted through an interest bearing repayment plan, which extended the period for full repayment of outstanding principal of the moratorium stock by 30 months to March 31, 2015 from September 30, 2012. This also means the security stock held by BOS doesn't have to be repaid until March 31, 2015 instead of by April 30 next year, and the full repayment of outstanding notes was also deferred by 30 months, to April 30, 2015.

Geneva provides hire purchase finance and personal loans secured by registered security interests over personal assets such as cars, furniture, appliances and mortgages on residential property. The company tightened its lending criteria in 2008, which it says means its client profile now has higher affordability and credit performance, and greater residence and employment stability.

As of March 31, Geneva had 13,310 loans on issue with an average size of NZ$6,446.

Its latest prospectus, dated June 18, 2010, seeks up to NZ$150 million of first ranking debenture stock, with the minimum investment of NZ$5000, and up to NZ$30 million in subordinated notes. The company's website advertises interest rates on debenture investments of 9.75% per annum over 18 months up to 11.25% over 36 months.

Geneva has a CCC credit rating from Standard & Poor’s, which S&P says makes it “currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial commitments.” Its auditors, Staples Rodway, also flagged in Geneva’s annual accounts fundamental uncertainties on a NZ$2.5 million deferred tax asset and NZ$2.24 million equity security relating to an unlisted property investment company.

However, in the prospectus Geneva says it expects to be able to comply with the Reserve Bank’s non-bank deposit taker regulations due for introduction on December 1, including the capital ratio requirements.

As of March 31 Geneva had NZ$61.75 million worth of debenture stock outstanding, including NZ$30 million worth of security stock issued to BOS, which was drawn down to NZ$24 million. The company also had notes on issue worth NZ$4.4 million.

(Update adds paragraphs on the 2008 capital reconstruction plan and the interest bearing repayment plan approved by investors' this year.)

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6 Comments

Its a bit of a misleading article though - what about the conversion of debenture stock to equity, does that get counted. That equity is virtually worthless isn't it Gareth? Come on man, do some research...

Jandel, I have updated the story to include the 2008 capital reconstruction plan and the interest bearing repayment plan approved by investors' this year. Apologies, I missed that in my rush on Friday. It is disclosed in the prospectus.

Thanks Gareth for the additional follow up. However I believe the Geneva press release to the NZX be misleading in that Geneva are comparing apples with oranges here. They say that  when the company entered moratorium it owed NZ$132.4 million to investors - presumably this is largely constituted by principal rather than interest. However since then Geneva says that it has repaid NZ$100.7m, however of this sum NZ$28.5m of this is interest, implying that only NZ$72.2m is a principal 'repayment' (you cannot classify interest as a 'repayment'). I would be VERY interested to know if Geneva are also including the debt converted to equity (which turned out to be worthless) as a 'principal repayment' within this NZ$72.2m amount. Even if it is not, they have still only repaid 54.5% of the principal outstanding at the start of the moratorium. This is very different to their claim of 76%, and a touch disingenuous me thinks...   

 

Jandel, Geneva tell me the repayment figures in their announcement exclude the debt for equity conversion.

 

Ok superb follow-up Gareth, thats what I like about this site. I still think the Geneva claim that interest is a 'repayment' is completely misleading however.  Cheers.

Cheers Jandel, thanks for raising some good points.