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Commerce Commission to investigate Hanover Finance

Thursday 24th July 2008

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Hanover Finance, the firm owned by Eric Watson and Mark Hotchin, is being investigated by the Commerce Commission after freezing repayments to 16,500 investors owed NZ$554 million.

"The investigation is into whether Hanover Finance breached the Fair Trading Act by making misleading representations to prospective investors and/or the public generally," the regulator said in a statement posted on its website. It declined to make further comment.

Hanover also stopped accepting new investments yesterday as it worked with trustees on a plan to restructuring plan. The firm is meeting its Trust Deed obligations and has the financial capacity to trade but is acting early to preserve value in the business.

"Against a backdrop of global credit uncertainties, falling property prices and lower reinvestment rates, the industry model has collapsed," shareholder Mark Hotchin told yesterday.

Hotchin and Watson have pledged to support Hanover, he said.

The suspensions also apply to investments with Hanover Finance subsidiary United Finance Limited, and sister company Hanover Capital Limited.

The Hanover Finance book comprises approximately 13,000 investors with $465 million in debentures. United Finance has around 2,400 investors with $65 million in debentures. And Hanover Capital, offering secured preferential bonds, has around 1,100 investors with $24 million of bonds.

By Jonathan Underhill

  General Finance Advertising    

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