By Gareth Vaughan
Vehicle and consumer lender Avanti Finance, which has a NZ$40 million term loan from ANZ New Zealand, has disclosed a debenture reinvestment rate of 85%.
Avanti's latest prospectus, which seeks to raise up to NZ$30 million through issuing secured debenture stock in minimum parcels of NZ$10,000, notes its debenture reinvestment rate was 85% for the four months from March 31 to July 31 this year.
As of March 31 Avanti had NZ$20.9 million worth of debenture stock on issue paying interest ranging from 8.5% to 15% with an average rate of 12.5%. The company says it has a small number of large depositors with about half its debentures by value due to mature within a year of its March 31 balance date.
As of March 31 Avanti had net receivables from customers of NZ$82 million across about 10,000 loans. The vast bulk of its loans, 9,726 are principal and interest loans worth between NZ$1,000 and NZ$50,000 over one to five years. These are generally made to help customers' buy cars or make other personal purchases, and are secured by a first charge over motor vehicles or second mortgage or caveat over residential property.
The company also had 111 short-term property loans outstanding at March 31, with an average value of NZ$79,099.
Sister company bought
During the year to March Avanti bought sister company Galatos Finance for NZ$13.8 million from its parent G&S Investments, which is controlled by Avanti CEO Glenn Hawkins and chairman Stephen Eltringham. Through the acquisition Avanti inherited a term loan from ANZ, which matures on October 1, 2012, with a NZ$40 million limit that had NZ$28.1 million drawn down at March 31.
Galatos has bought loans at book value from Avanti funded by ANZ loans since 1996, which Avanti's directors say helps the steady growth of loan advances and liquidity management. Prior to buying Galatos, with is now a subsidiary of Avanti, Avanti was funded solely through debentures.
The Galatos deal saw it contribute NZ$1.4 million of profit after tax to Avanti for the six months to March 31 and add NZ$41.2 million worth of gross loan receivables minus a NZ$1.5 million impairment provision. Avanti therefore delivered a NZ$4 million net profit after tax for the year to March, more than double its NZ$1.6 million profit the previous year. Total equity at March 31 stood at NZ$28.6 million, up from NZ$12.9 million a year earlier.
G&S Investments as Avanti's shareholder, which is controlled by trusts associated with Hawkins and Eltringham, was paid dividends of 13.5 cents per share, or NZ$2.2 million in total, nearly double 7.91c a share the previous year.
Avanti has a BB- speculative grade credit rating with a positive outlook from Standard & Poor's. Last year S&P told interest.co.nz that Auckland-based Avanti, along with Whakatane-based consumer financier Asset Finance, was a standout in managing its way through the tricky waters of the Crown retail deposit guarantee scheme.
Avanti's directors include former senior Westpac manager June McCabe. CEO Glenn Hawkins is the son of Allan Hawkins, the CEO of Cynotech Holdings who served jail time for his role in the high profile 1989 crash of Equiticorp. Avanti's trustee is Covenant Trustee Company.
Overseen by the Reserve Bank as regulator of non-bank deposit takers, Avanti has an exemption allowing its independent directors McCabe and Paul Bravo to also be directors of Galatos.
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