Rates Round Up

Provisional Finance receivership winds up; Allied raises $6.3 million; Marac extends into vehcile finance. Govt guarantee to blame for high rates.

Monday, 25 May 2009

by Paul McBeth

Provincial Finance investors to get 92% of $296m owed
Provincial Finance's receivers have finished their work and expect most of the $296 million owed to debenture holders will be returned.

Some 11,000 investors will get back 92.2 cents in the dollar over the next three years after the Christchurch-based company collapsed at the end of May 2006.

PricewaterhouseCoopers partner and Provincial receiver Maurice Noone said all of the company's assets had been realised, including a legal settlement with debt collector and credit checker Veda Advantage.

While the receiver was always confident debenture holders would get most of their money back, preference shareholders and unsecured creditors will not receive any return.

Allied Farmers raises $6.3 million, calls on underwriter
The rural services and finance group raised $6.3 million through a rights issue, and called on underwriter McDouall Stuart to take up $1.83 million.

The proceeds will be used to refinance the Spiers Group acquisition, reduce debt and lift working capital.

The company has extended its $21.5 million term facility and $2.5 million overdraft to July next year.

Allied plans to split rural business into a wholly-owned subsidiary in July after the finance arm's poor performance dragged the group into a first-half loss.

Govt deposit guarantee scheme to blame for high rates, says BNZ
The government's deposit guarantee scheme is keeping deposit rates high by attracting funds away from banks and forcing them to compete aggressively with finance companies, according to the Bank of New Zealand's latest weekly outlook.

High premiums have forced the banks to keep rates high as offshore funding remains expensive irrespective of the debt's term.

"Funding costs remain highly elevated with premiums above 2% still having to be paid" for offshore funding, said chief economist Tony Alexander.

Concerns over the global economy at the start of the week saw rates edge down, but as optimism returned, the cost of borrowing crept back up, he said, with medium- to long-term housing rates past their multi-year lows and set to rise in a haphazard fashion.

MARAC extends into vehicle finance
Marac extends foray into motor vehicle finance market Marac Financial Services, the finance arm of Pyne Gould, extended its foray into motor vehicle finance, entering an assurance scheme with Hyundai Motors, as it builds on the void left by GE Capital and GMAC’s exit from the New Zealand auto market. [READ ON]

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