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Dominion Finance Group placed in receivership

Wednesday 10th September 2008

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Dominion Finance Group, the larger of the listed finance company's two operating units, was placed in receivership by Perpetual Trust, owing some NZ$224 million to investors.

Dominion Finance Holdings today said its other main unit, North South Finance, may manage to win support for a moratorium on payments to investors because its trustee, Covenant Trustee Co. isn't expected to follow Perpetual in calling in receivers.

The ailing firm had been trying to negotiate repayments by installment after liquidity dried up. The company froze a total $276 million of debenture funds in June.

Dominion Finance Group's moratorium plan "was at an advanced stage" and directors "do not consider that Perpetual Trust's decision is in the best interests of stockholders," they said in the statement.

The shares of Dominion Finance Holdings last traded at 2 cents and have lost almost 100% of their value in the past year.

Rod Pardington and Barry Jordan of Deloitte were appointed receivers.

More than 20 finance companies have either failed or sought moratoriums in the past two years as the global credit squeeze and waning investor confidence made it harder to maintain enough funds to make payments to debenture and note holders.

North South Finance said it has provided Covenant Trustee with terms of its moratorium and hopes to have documents in front of stockholders either late this month or in early October.

By Jonathan Underhill

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