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Geneva Finance halts new lending

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  • Geneva Finance halts new lending

    Geneva Finance halts new lending
    5:00AM Tuesday October 09, 2007
    By Adam Bennett

    Geneva Finance is understood to have ceased making new loans.

    Finance industry sources said the freeze on new loans was effective from yesterday.

    The Business Herald understands Geneva sees this as a temporary move to ensure liquidity during a difficult period for the industry.

    Geneva mainly offers hire purchase for consumer goods and cars, personal and small business loans.

    Geneva chief executive Shaun Riley refused to either confirm or deny the lending freeze.

    "We're doing a number of things at the moment," he said.

    "We will continue to prudently manage our lending and business activities in line with current market conditions and continue to adapt and shape our business in line with this changing market."

    Riley said Geneva was meeting all the covenants on its trust deed and its banking facilities.Geneva has a $50 million line of credit from the Royal Bank of Scotland.

    Last month ratings agency Standard & Poor's placed the company on "CreditWatch negative", indicating there was a 50/50 chance its B+ rating would be downgraded over the following three months. S&P credit analyst Derryl D'silva said there was a possibility that current financial market disruptions might lead to Geneva being unable to manage liquidity and funding pressures.

    "Geneva's ability to continue to draw down on this facility and more generally maintain support from its bankers are the most important rating factors in the short term," said D'silva.

    Since Rod Petricevic's Bridgecorp toppled in July, investors have been withdrawing millions from the $12 billion finance company debenture market. Further failures have seen the pace of those withdrawals increase, with commentators saying that even well-managed companies are facing risks because they cannot maintain liquidity to meet their commitments as debentures mature.

    Last month Riley told the Business Herald the Royal Bank of Scotland facility had been obtained in 2006 to see the company through the type of scenario now unfolding. While the company had drawn down on the facility in recent weeks, he said it still had significant remaining capacity to fund its operations for some time yet.

    He also said the company was talking to investors to reassure them their money was safe and it had reined in lending activity.

    At the end of March Geneva had secured stock of $17.5 million, debentures of $112.7 million, unsecured deposits of $8 million and loans totalling $171.2 million. Geneva is owned by Finance Investments Holdings, which in turn is 85 per cent owned by Auckland property developers Peter Francis, Gary Hitchcock and Nigel Burton.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    The reinvestment rate of debenture holders is apparently around 20% for one of the big players so they have pretty much stopped all landing as well. Funding is still there, but the deals have to be good.


    • #3
      At the risk of being accused of vindictive.
      Someone from Geneva Finance has in the last 24 hours asked to rent property off me.
      Would it I be regarded as prudent to take them on as a tenant.
      What do you all think.
      I am sure the applicant is a wonderful honest person. She is asking for a top of the line property.
      Would I be asked to overlook rent payments whilst they work their way through a difficult patch.


      • #4
        Maybe ask for 6 months in advance


        • #5
          Geneva Finance Halts Lending

          This is just the tip of the iceberg!!!
          Last edited by Commercial Dan; 09-10-2007, 09:39 AM.


          • #6
            Originally posted by cube View Post
            Maybe ask for 6 months in advance
            I think my empire will strike back.
            So many of these finance companies hurt the innocent investors. These honest hard working savers have little or no recourse nor control over the events that are unfolding.
            Why should anyone be supporting and helping the staff of firms that potentually are causing so much hurt to others. In effect by housing their staff we are assisting the finance companies carry out their business.
            I often get accused of immoral behaviour by housing prostitutes who work off site.
            Is this any different.


            • #7
              Dollars don't know of morals.

              Remember every dollar is equal, Glenn. If Maryann came to you for a flat, surely you wouldn't turn her down. But then I guess her income is secure.


              • #8
                Hi there,
                Yes, I just had a call from a tenant who worked for Geneva. He was made redundant yesterday without any warning, and also without any redundancy payment. Evidently they are having lots more people made redundant, and want to do them all at the same time. Sounds grim, and indeed just the tip of the iceberg.


                • #9
                  Originally posted by Kay View Post
                  Hi there,
                  Yes, I just had a call from a tenant who worked for Geneva. He was made redundant yesterday without any warning, and also without any redundancy payment. Evidently they are having lots more people made redundant, and want to do them all at the same time. Sounds grim, and indeed just the tip of the iceberg.
                  Yet another difficult call for another landlord.
                  I did not know that they were putting off people. Well actually I know absolutely nothing about this or in fact any finance companies.
                  So what will you do when they say they can not afford the rent next week. Winz will make them have a stand down of 6 or more weeks if in fact they help them at all.


                  • #10

                    Geneva finance gets ratings downgrade
                    NZPA | Wednesday, 10 October 2007

                    Geneva Finance has been downgraded by credit ratings agency Standard & Poor's from B+ to B-.
                    Standard & Poor's director Gavin Gunning said the change reflected a sense that Geneva's short-term liquidity and funding position was increasingly under pressure.
                    "While Geneva continues to benefit from the demonstrable support of its primary bankers, the nature and extent of potential future support has changed since Standard & Poor's previous rating action on September 10, 2007."
                    He said there were no new material, or immediate other concerns reflective in the rating, and said Geneva's "creditwatch" situation should be resolved within a month.
                    S&P moved the company's creditwatch outlook upwards to "developing" from negative a month ago, meaning the rating could change depending on the outcome of funding talks.
                    Geneva's sister company Quest Insurance Group was given a lowered rating of CCC+ from B-.
                    Geneva CEO Shaun Riley said the company continued to be prudent and said the rating decision was extremely disappointing, given that it was in talks with an offshore institution over an equity and debt funding package.
                    "This action is counterproductive to our efforts to prudently manage our business and maintain investor confidence," he said.
                    Mr Riley said the rating change was a response to market sentiment and the volatile state of the finance sector in general .
                    He confirmed that "like all other finance companies", Geneva had reduced its lending our costs .
                    "We continue to work with the Bank of Scotland and investors to meet our commitments."
                    OllyN [email protected]
                    Independent Property Consultant
                    Residential and Commercial Solutions


                    • #11
                      Thank God I did not re-invest my $100K with them.............................................. .................................................. .............................


                      • #12
                        Do It Yourself Receivership?

                        Geneva 'defaults' on debt repayments
                        Tuesday, 16 October 2007

                        Finance company Geneva Finance said today it is no longer taking deposits, and will ask investors for a moratorium on all investments until April 2008.
                        A lack of confidence in the sector, and a ratings downgrade and negative comments by credit rating agency Standard & Poor's, had hurt the company's investment position, said Geneva chief executive Shaun Riley.
                        "The board and management of Geneva, in consultation with our trustee, have decided to act prudently by requesting the moratorium," Mr Riley said.
                        "This will allow the company the time to stabilise its investment position, and focus on negotiating a significant debt and equity transaction that would secure the long term future of the company and protects all investors' interests."
                        S&P also warned that if investors rejected Geneva's proposals, the trustee was likely to proceed with enforcement actions.
                        "A payment default has occurred with Geneva's nonpayment of debenture redemptions upon the due date. Under these circumstances, the only available course of action to Standard & Poor's is to lower the long-term counterparty credit rating on Geneva to 'D'," Standard & Poor's director Gavin Gunning said.
                        However, the ratings may improve it investors vote in favour of Geneva's proposals.
                        The company was confident of maintaining its $50 million line of credit from the Bank of Scotland International, which S&P has said was crucial to Geneva's future.
                        Last week, Geneva said it had cut back the number of car dealers it dealt with, and admitted it was not lending at normal levels.
                        Today, Mr Riley said the company remained profitable with strong operating cash flows and a "significant" excess of assets over liabilities.
                        The company had told the Securities Commission it was no longer taking deposits. All investments made since Thursday have been placed in trust and will be returned to investors this week.
                        Geneva planned to extend all classes of investment maturities by six months, pay interest on all investments monthly during the period, and continue to maintain business operations, trading and lending.
                        Geneva, which mainly offers hire purchase for consumer goods and cars, personal and small business loans, will hold a meeting for investors to vote on its proposal.
                        The company would be monitored by a third party on behalf of the trustee, Covenant Trustee, to ensure compliance with the terms of the moratorium.
                        According to KPMG's survey of financial institutions, Geneva was the 32nd-ranked finance company in 2006 by size with assets of $141m and debt securities of $127m plus subordinated debt of $9.8m.
                        Its most recent prospectus showed that at March 31, it had secured stock of $17.5m, debentures of $112.7m, and unsecured deposits of $8m. Loans had grown to $171.2m from $141.6m in 2006.
                        Geneva is owned by Finance Investments Holdings, which in turn is half owned by three prominent Auckland property developers, Peter Francis, Gary Hitchcock and Nigel Burton. The three own preference shares, which may rank above ordinary shares, equivalent to another 35 percent of the total shareholding.
                        Ten finance companies have collapsed in the past 18 months, including seven this year as the main local effect of a global credit crunch.
                        After Geneva's statement, Standard & Poor's said it had lowered its ratings to the default-level D from B-, and lowered the rating on sister company Quest Insurance Group to CC with a negative outlook from CCC+.
                        Last edited by OllyN; 16-10-2007, 06:45 PM.
                        OllyN [email protected]
                        Independent Property Consultant
                        Residential and Commercial Solutions


                        • #13
                          Going going gone!!


                          • #14
                            All these places are asset rich and cash poor. That'll stop any business.
                            Squadly dinky do!