Wednesday 15th June 2011
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The Financial Markets Authority (FMA) has made an interim order to stop allotment of securities by GFNZ Group, formerly known as Geneva Finance.
The power to do so was new, and it was the first time it had exercised it, the newly-established FMA said today.
It had learned that in the March quarter, GFNZ breached its minimum new lending covenant with its primary funder, Bank of Scotland. As a result, Bank of Scotland’s facility was repayable on demand.
GFNZ was a finance company operating under moratorium, and its shares were listed on the NZX. Many former debt holders were now shareholders as a result of a debt-for-equity swap in March, the FMA said.
GFNZ was a continuous issuer and was raising money from the public through its registered prospectus, dated May 12.
"We believe our action is in the public interest because the prospectus relates to a continuous offer of debt securities. It is vital that existing and prospective investors have sufficient information about the company to make an informed assessment of their investments," FMA chief executive Sean Hughes said.
"The interim order will prohibit any further allotment and so protect investors from being misled.
"Our first use of this new stop order power is one means by which we can improve investor confidence in the accuracy of information presented to the market."
The FMA was seeking further information from GFNZ while it considered whether to order the offer documents to be corrected to FMA’s satisfaction or cancelled on the grounds that they were likely to deceive, mislead or confuse investors.
The FMA is a new Crown entity established on May 1. It took over the functions of the Securities Commission and the Government Actuary, which were disestablished, and consolidated other functions from the Ministry of Economic Development.
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