Motor Trade Finance to increase capital to satisfy RBNZ

Thursday 25th September 2008

Motor Trade Finance plans to increase capital as it turns into an investor-owned company from a cooperative and comes under the umbrella of the central bank.

"Co-operative capital, because of its redeemable nature, does not meet the test for equity under IFRS (International Financial Reporting Standards) and may not meet Reserve Bank requirements, it said in a statement to the NZX.

Motor Trade's 11.07% bonds trade on the NZDX market where they are quoted at a price of 83c. The company will put a restructuring proposal to its co-operative shareholders that includes additional capital and capitalisation of undistributed profits.

The change will help ensure the company can meet prudential, regulatory and operational requirements, it said.

The company "continues to trade profitably, in a slowing economy, and will deliver a result in
line with expectations and historical performance, for the year ending Sept. 30," it said.

"New loans written are marginally behind last year to date, with the reduction reflecting the slow down in vehicle sales." Arrears are "marginally above"
last year.

By Jonathan Underhill

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