Archive | Geneva

Professional investors support Geneva Finance debt programme

Vehicle lender Geneva Finance said on Wednesday it had raised $1.66 million of new debt funding from 8 professional investors, enabling it to meet its own debt repayment programme ahead of schedule.

Geneva, owned by the NZAX-listed GFNZ Group Ltd, placed a further $2.075 million of new business receivables into its Prime Asset Trust Ltd funding scheme, using this security to raise the debt funding.

In response to a difficult funding market, Geneva developed the Prime Asset Trust funding product which offers investors a highly secure & high-cashflow investment opportunity. It’s only available to professional investors and the financing structure is completely independent of Geneva, which retains a subordinated position of up to 20% in the receivables but receives no cash from the investment until all investors’ principal & interest is repaid in full.

The company entered a 6-month moratorium in 2007 then won investor support for a reconstruction. It’s since repaid $134 million to investors, including interest at 11%/year to debentureholders, and reduced group operating costs by $29 million/year.

Federal Pacific Group Ltd (Alan & Alistair Hutchison, Auckland), a financial services firm operating throughout the Pacific region, became a cornerstone shareholder a year ago with a 19.9% stake.

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Hutchisons’ Federal Pacific to take cornerstone stake in Geneva Finance

Published 29 February 2012

Federal Pacific Group Ltd (Alan & Alistair Hutchison, Auckland), a financial services firm operating throughout the Pacific region, will become a cornerstone shareholder of NZAX-listed car loan provider GFNZ Group Ltd (ex-Geneva Finance) after the placement of 45 million additional ordinary shares.

Federal Pacific has also arranged additional funding lines for Geneva to enable the group to expand its loan book growth and helpt the ongoing refinancing of existing funders via a capital-insured professional investor scheme.

The placement of ordinary shares at 2.75c/share will result in Federal Pacific taking a 19.9% stake in Geneva. As part of the agreement with Federal Pacific, Geneva has also undertaken to offer a pro rata rights issue to all shareholders, including Federal Pacific, at 2.75c/share.

Geneva has net asset backing of 5.7c/share and last traded at 1.3c. The company entered a 6-month moratorium in 2007 then won investor support for a reconstruction. It’s repaid $121 million of debt funding, including interest at 11% to public debentureholders, reduced operating costs by more than $25 million/year, acquired the Quest Insurance & Stellar debt collection operations, implemented online internet-based scorecards & loan application systems for introducers and restructured its operations to allow the new business model to focus on a market segment that offers attractive yields that carry considerably less risk.

Geneva managing director David O’Connell said yesterday: “We see this transaction as a significant & positive development for the group. Federal Pacific’s support will enable us to fast-track the new business model expansion while maintaining our scheduled debt repayment programme. Geneva is operating in a market that has seen many competitors fall away, and we see the expansion of the profitable new business model into this space as the key to putting the group on to a long-term & sustainable, profitable platform.”

Geneva provides finance & financial services to the consumer credit and small- medium business markets. The parent company changed its name to GFNZ in April 2011. Federal Pacific’s operations throughout the Pacific region include investments in banking, personal & business finance, money transfer & foreign exchange trading.

Earlier stories:

1 July 2011: BOS waives minimum lending covenant after Geneva breach

16 June 2011: New authority stops Geneva issuing debt after covenant breach

15 June 2011: Geneva’s old ledgers keep it in the red, new lending not quite up to lender’s benchmark

16 March 2011: Geneva asks to convert debt securities to meet capital adequacy ratio

3 February 2011: Geneva makes early moratorium repayment

8 October 2010: Geneva tops $100 million in post-moratorium repayments

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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BOS waives minimum lending covenant after Geneva breach

Published 1 July 2011

GFNZ Group Ltd (ex-Geneva Finance Ltd) said yesterday its banker, BOS International (Australia) Ltd, had waived the breach of a minimum new lending covenant.

When GFNZ released its financial results for the March year on 14 June, it said it was in breach of that covenant, but added: “The lending covenant was developed as a measure of the sustainability of medium/long-term profitability forecasts rather than a substantive measure of BOSIAL’s security position.”

Although the company played the breach down, the Financial Markets Authority reacted on 15 June by making an interim order stopping GFNZ from allotting securities.

The Financial Markets Authority said its action was in the public interest because the prospectus related to a continuous offer of debt securities. The authority’s chief executive, Sean Hughes, said: “It is vital that existing & prospective investors have sufficient information about the company to make an informed assessment of their investments.”

GFNZ also said yesterday its directors had resolved to take a more conservative approach in reporting the group’s financial position and write off a deferred tax asset after the auditors had emphasised their concern in their statement with the annual accounts.

The directors said this write-off – a non-cash transaction – would add $2.4 million to the company’s after-tax loss.

Earlier stories:

16 June 2011: New authority stops Geneva issuing debt after covenant breach

15 June 2011: Geneva’s old ledgers keep it in the red, new lending not quite up to lender’s benchmark

16 March 2011: Geneva asks to convert debt securities to meet capital adequacy ratio

3 February 2011: Geneva makes early moratorium repayment

8 October 2010: Geneva tops $100 million in post-moratorium repayments

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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New authority stops Geneva issuing debt after covenant breach

Published 16 June 2011

The Financial Markets Authority has made an interim order to stop allotment of securities by GFNZ Group Ltd (ex-Geneva Finance Ltd). This is a new power, and chief executive Sean Hughes said yesterday it was the first time the authority had exercised it.

GFNZ said when it released its financial results for the March year on Tuesday, it was in breach of one covenant under its facility from BOSIAL (Bank of Scotland International (Australia) Ltd), the “minimum new lending” covenant: “The lending covenant was developed as a measure of the sustainability of medium/long-term profitability forecasts rather than a substantive measure of BOSIAL’s security position.

“As at 31 March 2011, the group was $0.4 million (1.9% or about 32 loans) short of the required lending level under this covenant. Compliance with this covenant could have been achieved had the board been prepared to lower its asset quality standards. The board was not prepared to compromise asset quality. A waiver of this breach has been requested. The March 2011 unaudited accounts have been prepared on the basis that the group is successful in obtaining this waiver.”

The Financial Markets Authority said yesterday the facility was repayable on demand as a result of the breach. “GFNZ is a finance company operating under moratorium and its shares are listed on the NZX. Many former debt holders are now shareholders as a result of a debt-for-equity swap in March 2011. GFNZ is a continuous issuer and was raising money from the public through its registered prospectus dated 12 May. “We believe our action is in the public interest because the prospectus relates to a continuous offer of debt securities. It is vital that existing & prospective investors have sufficient information about the company to make an informed assessment of their investments.

“The interim order will prohibit any further allotment and so protect investors from being misled. Our first use of this new stop order power is one means by which we can improve investor confidence in the accuracy of information presented to the market.” Mr Hughes said the authority was seeking further information from GFNZ while it considered whether it should use its power to order the offer documents to be corrected to its satisfaction or cancelled on the grounds that they are likely to deceive, mislead or confuse investors.

Earlier stories:

15 June 2011: Geneva’s old ledgers keep it in the red, new lending not quite up to lender’s benchmark

31 March 2011: Geneva wins support to convert notes & debentures

16 March 2011: Geneva asks to convert debt securities to meet capital adequacy ratio

3 February 2011: Geneva makes early moratorium repayment

15 December 2010: Geneva reduces loss on 43% less revenue

8 October 2010: Geneva tops $100 million in post-moratorium repayments

13 June 2010: Geneva cuts loss, brings September payments forward

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

Want to comment? Go to the forum.

 

Attribution: Authority release, story written by Bob Dey for the Bob Dey Property Report.

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Geneva’s old ledgers keep it in the red, new lending not quite up to lender’s benchmark

Published 15 June 2011

Geneva Finance Ltd increased its loss to $6.2 million in the March year, from $5 million in 2010, but its new business divisions made a net $1.2 million.

The result was after paying no tax, against a $4.1 million tax bill in 2010.

The company’s revenue fell 35% to $15.5 million, total assets fell from $79.3 million to $65.5 million and net equity from $14.3 million to $13 million. Shareholders approved Geneva’s restructuring into 4 divisions on 31 March. Although the new structure hasn’t yet been formalised, the company said a reallocation of its returns would have resulted in after-tax profit of $0.6 million to the new business model, $0.2 million to its insurance operations and $0.4 million to its property business (rent received from group companies which tenant its head office building in Mt Wellington), and a $6.2 million loss by the old business model ledgers. The latest result includes an additional provisioning of $3.9 million on the old receivables ledgers: “While exiting these ledgers is proving costly, unlike the new business model, where there is an opportunity to expand profitability, the old business model ledgers have a finite, reducing cost of exit.” The company has repaid 60% of all debenture principal outstanding at November 2007 (the date Geneva entered a moratorium) and has paid all investors their full contractual interest each month. In total, Geneva has repaid $112.3 million in principal & interest to investors since November 2007. The company said it complied with all the covenant & capital adequacy requirements under the Reserve Bank and the group’s debenture trust deed, but was in breach of one covenant under its facility from BOSIAL (Bank of Scotland International (Australia) Ltd), the “minimum new lending” covenant: “The lending covenant was developed as a measure of the sustainability of medium/long-term profitability forecasts rather than a substantive measure of BOSIAL’s security position.

“As at 31 March 2011, the group was $0.4 million (1.9% or about 32 loans) short of the required lending level under this covenant. Compliance with this covenant could have been achieved had the board been prepared to lower its asset quality standards. The board was not prepared to compromise asset quality. A waiver of this breach has been requested. The March 2011 unaudited accounts have been prepared on the basis that the group is successful in obtaining this waiver.” Earlier stories:

31 March 2011: Geneva wins support to convert notes & debentures

16 March 2011: Geneva asks to convert debt securities to meet capital adequacy ratio

3 February 2011: Geneva makes early moratorium repayment

15 December 2010: Geneva reduces loss on 43% less revenue

8 October 2010: Geneva tops $100 million in post-moratorium repayments

13 June 2010: Geneva cuts loss, brings September payments forward

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Geneva wins support to convert notes & debentures

Published 31 March 2011

Geneva Finance Ltd won support today from all 3 of its investor categories for a debt-security conversion programme which will increase equity by $4.4 million.

Holders of subordinated notes voted 79.5% in favour of the conversion, debentureholders 92% and shareholders 95%.

Notes would be exchanged at the rate of 20,000 shares for each $1000 of outstanding notes principal, based on a share issue price of 5c, representing a 14% discount to the current market price of the shares and a 70.8% discount to net asset backing according to the September 2010 accounts. Debentures would be converted on similar terms, but on a voluntary basis. Geneva Finance will be renamed GFG Ltd and become a holding company, transferring all its receivables to 2 subsidiaries, Geneva Finance NZ Ltd & Stellar Collections Ltd. The new Geneva Finance subsidiary will hold new business assets, Stellar would hold old business assets and the group will have 2 other trading subsidiaries – Quest Insurance Group Ltd and the owner of its head office in Mt Wellington, Pacific Rise Ltd.

The proposal outlined in a letter to Geneva investors said the introduction of the Reserve Bank capital adequacy ratio on 1 December 2010 placed a heavier capital adequacy requirement on property, and Geneva owns its head office building. This put the company within the 8-10% capital adequacy guideline.

Geneva has repaid $111.3 million of investor principal & interest payments since the company entered a moratorium in November 2007 owing a net $132.4 million to investors. The interest payments total $33 million and have carried interest at an average 10.75%.

Earlier story:

16 March 2011: Geneva asks to convert debt securities to meet capital adequacy ratio

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Geneva asks to convert debt securities to meet capital adequacy ratio

Published 16 March 2011

Geneva Finance Ltdhas called a shareholder meeting for Thursday 31 March to approve a proposal to convert subordinated notes & debentures to equity.(The first meeting starts at noon, Commerce Club, Ohinerau St, Remuera).

The proposal would require 88.75 million new shares for holders of subordinated notes and 97.4 million for debentureholders. Those resolutions require 50% support from the meeting,

 

Notes would be exchanged at the rate of 20,000 shares for each $1000 of outstanding notes principal, based on a share issue price of 5c, representing a 14% discount to the current market price of the shares and a 70.8% discount to net asset backing according to the September 2010 accounts. Debentures would be converted on similar terms, but on a voluntary basis.

A third proposal is for Geneva Finance to be renamed GFG Ltd and become a holding company, and to transfer all its receivables to 2 subsidiaries, Geneva Finance NZ Ltd & Stellar Collections Ltd. The transfer of receivables requires 75% support.

The new Geneva Finance subsidiary would hold new business assets, Stellar would hold old business assets and the group would have 2 other trading subsidiaries – Quest Insurance Group Ltd and the owner of its head office in Mt Wellington, Pacific Rise Ltd.

Managing director David O’Connell said the conversion of notes would increase equity by $4.4 million and save the company $587,000/year in debt interest payments: “Geneva’s future prospects in terms of lower operating costs and attracting new debt will be significantly enhanced as a result of this increase in equity.”

The proposal outlined in a letter to Geneva investors said the introduction of the Reserve Bank capital adequacy ratio on 1 December 2010 placed a heavier capital adequacy requirement on property, and Geneva owns its head office building. This put the company within the 8-10% capital adequacy guideline.

In addition, as the company has told its investors for 2 years, the pre-April 2008 bad loans “have proved more difficult to collect than the board had envisaged. This difficulty has been compounded by the continued effect of the recession and unemployment of the people who at that time comprised the major portion of our borrowers. As a consequence, the new business model, though profitable, is not yet able to carry all the costs associated with exiting the old business model and still deliver a profit. Hence, if we are unable to get new equity, there is a risk the company will fall below the 8% minimum capital adequacy level and be put into receivership.”

The company’s continued focus on cost reduction had delivered operating cost savings of $2.1 million (29%) in the September half and $21 million/year compared to operating costs at October 2007.

Geneva has repaid $111.3 million of investor principal & interest payments since the company entered a moratorium in November 2007 owing a net $132.4 million to investors. The interest payments total $33 million and have carried interest at an average 10.75%.

Earlier stories:

3 February 2011: Geneva makes early moratorium repayment

15 December 2010: Geneva reduces loss on 43% less revenue

8 October 2010: Geneva tops $100 million in post-moratorium repayments

13 June 2010: Geneva cuts loss, brings September payments forward

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

Want to comment? Go to the forum.

 

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Geneva makes early moratorium repayment

Published 3 February 2011

Geneva Finance Ltd said today it would pay investors tomorrow the principal repayment due on 31 March. Geneva said it would bring forward both the debentureholders’ principal of $2.5 million and the scheduled BOS International (Australia) Ltd facility reduction of $2.5 million. The company has built up a positive cash position and has the right under its interest-bearing repayment plan to repay moratorium debentureholders & BOSIAL early, either in full or in part on a pro rata basis. Inclusive of this payment, Geneva has repaid $111.3 million of investor principal & interest payments since the company entered a moratorium in November 2007 owing a net $132.4 million to investors. The interest payments total $33 million and have carried interest at an average 10.75%.

Earlier stories:

15 December 2010: Geneva reduces loss on 43% less revenue

8 October 2010: Geneva tops $100 million in post-moratorium repayments

13 June 2010: Geneva cuts loss, brings September payments forward

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

Want to comment? Go to the forum.

 

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Geneva reduces loss on 43% less revenue

Published 14 December 2010

Geneva Finance Ltd said today it cut its half-year loss from $2.6 million last year to $950,000, a 64% improvement, on revenue down 43% to $5.26 million. The company has segregated its operations into 4 business segments: The new business model, insurance, property (Geneva’s Mt Wellington head office is the only property the group owns), and the old business model assets. On a segment basis, the first 3 segments were profitable in the September half. The losses were attributable to the holding costs associated with exiting the old business model assets. The new business receivables balance has been raised to a level where the related operating costs can be absorbed and this operation is generating a profit. The Geneva board said the key challenge remained to attract new equity & debt, which was being pursued.

Operating costs have been slashed by $21 million/year since October 2007, including savings of $2.1 million in the September half (29% more than a year earlier). The company made its scheduled September principal repayment 3 months early, taking principal & interest repayments to investors over $100 million.

Earlier stories:

8 October 2010: Geneva tops $100 million in post-moratorium repayments

13 June 2010: Geneva cuts loss, brings September payments forward

1 February 2010: BOSIAL tells Geneva full funding unlikely to be extended

15 June 2008: Geneva reports $7.9 million loss, backing slips to 34.7c

28 April 2008: Geneva wins reconstruction support, but the bonus was the warmth of it

15 April 2008: Geneva Finance puts reconstruction to investors

 

Want to comment? Go to the forum.

 

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Geneva tops $100 million in post-moratorium repayments

Published 8 October 2010

Geneva Finance Ltd said yesterday it had made $100.7 million of principal & interest repayments to investors since it entered a moratorium in November 2007.

When the moratorium began, Geneva owed investors a net $132.4 million. The payments include interest payments to investors (including the company’s bankers) of $28.5 million, at an average interest rate of 10.75%, and principal repayments to public debentureholders totalling $56.7 million. From 1 October, the company’s operations have been internally restructured to segregate ongoing business performance from the discontinued activities, improving transparency for future reporting.

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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