Sharechat Logo

Geneva forecasts loss, breaches bank covenants on loan book

Wednesday 15th October 2008

Text too small?
Geneva Finance Ltd, the lender that closed its branch network to cut costs, said it is in breach of bank covenants and now expects a full-year loss because of an increase in bad loans.

The company will take a one-time provision against its so-called old ledger, which is loans to people with lower credit quality, of NZ$6.3 million in the year ending March 31. As a result, it will post a loss of NZ$4.4 million, compared to the NZ$2.7 million envisaged in its capital reconstruction offer document.

Geneva's banker is BOS International, a unit of the U.K.'s HBOS, which is about to have the British government as a shareholder. A spokesman for BOS in New Zealand declined to comment and a spokesman in Perth couldn't immediately be reached.

Borrowers on the old ledger had been squeezed by rising food and petrol prices, eating into their disposable incomes and increasing defaults, Geneva said. At the same time the global credit squeeze had driven up costs and reduced availability of funds.

"Over the last six months there has been an unprecedented upheaval in the world and the New Zealand economy," Geneva said in a statement. "These events and the related credit impact have had a significant impact on the collectability of the old ledger."

Geneva is in talks with BOS International, after breaching covenants of its financing facility as at Sept. 30. BOS also is involved with the management buyout of Strategic Finance from Allco Hit, which today said that deal has come off the rails and the parties will resume talks.

Excluding the one-time charge, earnings this year would be NZ$1.9 million, Geneva said.

Geneva posted a NZ$7.9 million loss in the 12 months ended March 31, 2008, reflecting the network closure, restructuring costs associated with its moratorium and charges to adopt IFRS accounting.

Geneva has divided its loan book in two, with the new ledger comprising people with better credit records. As at Sept. 30, old ledger loans were NZ$43.7 million, or 43% of the total.

The company has a moratorium on some NZ$138 million of deposits.

By Jonathan Underhill



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

28th October 2021 Morning Report
Wellington Drive Technologies Limited (NZX: WDT) Performs Strongly in Q3-2021
Ryman Healthcare Limited (NZX: RYM) Acquires Extensions to Two Existing Victorian Sites
Promisia Healthcare Limited (NZX: PHL) Banking Covenant Update
Pictor Limited Announces Start of US Clinical Trials for SARS-CoV-2 Serology Test
Arvida Group Limited (NZX: ARV) Opening of Rights Offer
Move Logistics Group Limited (NZX: MOV) Announces $40m Capital Raise
27th October 2021 Morning Report
The a2 Milk Company Limited (NZX: ATM) Investor Day 2021
Contact Energy Limited (NZX: CEN) Considers Green Capital Bond Offer