Sharechat Logo

FMA orders GFNZ to stop issuing debentures

By Jenny Ruth

Thursday 16th June 2011

Text too small?
 Jenny Ruth

The Financial Markets Authority (FMA) has ordered GFNZ Group, formerly Geneva Finance, to stop issuing debentures while it investigates the breach of its banking covenant revealed in GFNZ's results late yesterday. 

This is the first time the FMA has used this power and it says the breach means Bank of Scotland's lending facility is now payable on demand. 

GFNZ, which is operating under a moritorium agreement with debenture holders agreed in November 2007 and revised in March last year, said it had asked BOS for a waiver and had prepared its accounts assuming the waiver will be granted. 

The FMA says many of GFNZ's shareholders are former debt holders as a result of a debt-for-equity swap in March although GFNZ continues to raise money from the public through its May 12 prospectus. 

“We believe our action is in the public interest because the prospectus relates to a continuous offer of debt securities,” says FMA chief executive Sean Hughes. 

“It is vital that existing and prospective investors have sufficient information about the company to make an informed assessment of their investments.” 

FMA is seeking further information from GFNZ before deciding whether to order a correction to its prospectus or to cancel the prospectus on the grounds it is likely to deceive, mislead or confuse investors. 

The GFNZ prospectus, which contains some details of its position at March 31 but not a full set of accounts to that date, states the BOS facility matures on March 31, 2015 Yesterday, GFNZ said while it complies with its debenture trust deed, Reserve Bank covenants and capital adequacy requirements, it is in breach of one of its covenants with BOS International Australia relating to minimum new lending. 

At March 31, GFNZ was $0.4 million or about 32 loans short of its required new lending under this covenant, which was developed to measure the sustainability of its medium to long-term profitability forecasts. 

“Compliance with this covenant could have been achieved had the board been prepared to lower its asset quality standards,” GFNZ said. It has requested a waiver of the covenant and its accounts have been prepared assuming the waiver will be granted.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
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:

Contact Energy Limited (NZX: CEN) Considers Green Capital Bond Offer
Tourism Holdings Limited (NZX: THL) Sells Mighway and SHAREaCAMPER to Camplify
26th October 2021 Morning Report
Harmoney Corp Limited (NZX: HMY) Prices $105m Inaugural ABS Transaction
New Zealand Rural Land Company Limited (NZX: NZL) Agreement to acquire large scale dairy asset portfolio
EROAD Limited (NZX: ERD) launches Clarity Solo Dashcam
22nd October 2021 Morning Report
Pictor ready to roll out game-changing COVID antibody test in New Zealand
Scott Technology Limited (NZX: SCT) Announces FY21 Results
21st October 2021 Morning Report