Reuters New Zealand
NZ finance company Hanover suspends payments
Wednesday July 23, 05:49 PM
WELLINGTON, July 23 (Reuters) - New Zealand non-bank finance company Hanover Finance Ltd said on Wednesday it was suspending repayment of loans and interest as it looks to restructure and preserve value for creditors.
New Zealand's fifth-largest finance firm by assets said market conditions have deteriorated and uncertainty has grown over borrowers' ability to repay loans.
The New Zealand non-bank finance sector, which has generally concentrated on consumer, motor vehicle and property development lending, has been hit by a series of company collapses as investors have stopped lending and demanded repayment of loans.
"Against a backdrop of global credit uncertainties, falling property prices and lower reinvestment rates, the industry model has collapsed," one of the private group's major shareholders Mark Hotchin said in a statement.
"Given the future uncertainty for the industry and the impacts now being felt by even the most well-established finance companies, we believe it is prudent to act early to preserve value for all," Hotchin said.
Hanover, along with two subsidiaries, has around NZ$550 million ($417 million) in deposits from about 16,700 investors. It said it was also suspending taking of deposits.
Hotchin said Hanover was continuing to meet its trust deed obligations and had a financial capacity to trade. A restructuring plan was being drawn up and would likely be presented to investors in late August.
More than 20 non-bank finance companies have collapsed or sought to delay and restructure the repayment of deposits worth close to NZ$2 billion in the past two years.
New Zealand companies have not been exposed to the subprime mortgage crisis but have suffered through the increased cost of borrowing and loss of investor confidence.
The companies have largely been funded by issuing debt securities, known as debentures, usually offering higher interest rates but less security than trading bank deposits.
New Zealand's banking sector is dominated by the major Australian banks including Australian and New Zealand Banking Corp (ASX: ANZ.ax) , Westpac Banking Corp (ASX: WBC.ax) , National Australia Bank (ASX: NAB.ax) and Commonwealth Bank of Australia (ASX: CBA.ax) . ($1=NZ$1.32) (Reporting by Gyles Beckford)
| More Quotes and Company Information: |
Next Article: CHRONOLOGY-Reserve Bank of NZ interest rate moves
Previous article: NZ dollar at 2-week low on rate risk, bonds flat
Top Headlines
NZ employment rebounds strongly in Q2, kiwi up
Thursday August 7, 01:51 PM - Reuters New Zealand
WELLINGTON, Aug 7 (Reuters) - New Zealand employment posted a surprisingly strong rebound in the second quarter, led by gains in the education and finance sectors, dampening expectations the central bank would cut interest rates aggressively. Read More...
US dairy industry set to resist push for FTA
Thursday August 7, 01:35 PM - NZPA
The United States' dairy sector is looming as a major stumbling block for any New Zealand-USA free trade agreement (FTA). Read More...
Pohokura oil and gas reserves lifted
Thursday August 7, 01:17 PM - NZPA
Oil and gas reserves in this country's largest petroleum field at Pohokura, offshore from New Plymouth, have both been lifted. Read More...
Calculators
Copyright © 2008 Yahoo! All rights reserved.
Yahoo!Xtra: A Yahoo!7/Telecom New Zealand Company.