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Dominion Finance bailout rejected

Friday 22nd August 2008

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Dominion Finance Holdings bailout plan was rejected by its trustees forcing the company to look at winding up its businesses.

Shares tumbled 57%.

The company will now put a proposal to stockholders and its banks to sell the assets of Dominion Finance Group and North South Finance, its main sources of revenue. They suspended debenture payments in June for an unspecified period because of a liquidity squeeze.

"The orderly wind down" of the two units is the next best available option, deputy chairman Terrence Butler said in a statement. "This will involve "some immediate write-offs and brand value in the company's financial statements."

The stock fell 6.5 cents to five cents, bringing its slump this year to about 92%. The stock was suspended for almost a month in July after Dominion Finance failed to file its annual report by the NZX's deadline.

In May, the company posted an annual profit of NZ$8.95 million, generated by Dominion Finance Group and North South, and said it expect earnings to rise in the current year. Within a month, the two units were at risk of running short of cash.

It blamed the moratorium on payments on "the impact of the international credit crisis," which had eroded investor confidence.

By Jonathan Underhill

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