Read Oxford Finance's statement below:
Oxford Finance Corporation Limited (“Oxford Finance”) has today announced that, from 1 April 2011 it will no longer need to attract external investors to fund its finance operation.
This means that the company will cease to offer its hugely popular debentures to the public. Instead, the BNZ will replace public investment for the purposes of funding the Oxford Finance lending business.
Oxford Finance Executive Director John Yeoman says the decision to move away from offering debt securities was not taken lightly. He says the company was extremely aware of the large group of loyal investors who have entrusted their investments with the company for many years, some going back to the origins of the company 23 years ago.
However he says the recent significant reform in the financial services industry, brought about largely by the Global Financial Crisis, has led to a substantial increase in the level of disclosure and financial adequacy requirements, including changes to the Non Bank Deposit Taker’s regulations.
“While these reforms are a positive thing for investors, it does come at a considerable additional cost to organisations offering debt securities to the public,” explains Mr Yeoman. “Unfortunately, for small to medium deposit takers, these increased compliance costs can have a significant impact on profitability.”
Fortunately for Oxford Finance, it belongs to the much larger Electra Group – a business with assets of more than $269 million and shareholders’ funds of $132 million. This means Oxford Finance is able to leverage off the Group’s considerable financial strength to secure more favourable funding arrangements.
“Our ownership structure provides the company with access to business opportunities that many similar sized finance companies simply don’t have,” explains Mr Yeoman. “The opportunity to significantly lower compliance costs and free up capital for further growth opportunities was the right decision to make from a commercial perspective.”
“Trustees Executors has been consulted throughout the process and they support the change,” says Mr Yeoman. “It also believes the proposed process with respect to existing investors is appropriate and fair.”
The Oxford Finance offices will remain open and all staff fully employed. There are no plans to reduce the number of staff.
“Aside from the change to our funding arrangements, all other business will continue as normal,” says Mr Yeoman.
The company is encouraging investors in Oxford Finance to call them on 0800 263 264 if they have any questions about the change and how it affects their existing investments with the company.