Provincial Finance stops accepting new investments

Provincial Finance says it will report a loss for the year ending March 31, and it has stopped taking in new investments.

Wednesday, 10 May 2006

“Some other factors are also being worked on over the coming weeks that may also need to be included in a new prospectus to ensure investors and advisors are fully informed.”

“The results will show a loss, and the directors have decided that the company should not take in further funds until we are in a position to explain this to investors, after the results have been independently verified by our auditors.”

Lyall says the loss arises from car loan lending that the company engaged in during 2003-2005.

“While we had made a provision at 30 September for losses against the lending, the provision has proved to be significantly inadequate. To ensure that the provision at 31 March is sufficient we and our auditors Ernst & Young are now spending time reviewing the provisioning prior to publishing the full year results.”

He says directors considered preparing an amendment to the existing prospectus to cover the expected results prior to audit, but as the company was close to completing its audited financial statements they decided to prepare a new prospectus based on the audited financial statements. “This is likely to take another 3-4 weeks in line with the normal time of early June for filing the prospectus.”

“As a consequence we are not able to take in further debenture deposits or reinvestments under the old prospectus and so we would appreciate you holding off sending us any further funds until we have issued the new prospectus.” Provincial has been holding separately the funds that have been deposited over the last three weeks, while it worked out its prospectus requirements. Lyall says since this has taken longer than expected it is returning this money to investors.

The payment will include interest at the appropriate rate as per the investor’s instructions.

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