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GFNZ to release new prospectus; S&P puts it on negative credit watch

GFNZ Group, formerly Geneva Finance, should have a new prospectus in the market aimed at attracting new debenture funding within the next couple of weeks.

Tuesday, 5 June 2012

by Jenny Ruth

Managing director David O'Connell says the company is "certainly optimistic" it will be able to attract new funding.

GFNZ's plans were revealed in a press release from international ratings agency Standard & Poor's which has placed the company's "CCC-" credit rating on negative watch pending a funding deal with its 19.9% shareholder Federal Pacific Group being completed.

S&P says: "In our view, the amounts invested are likely to be small in the initial months, with the receiveable deal (with FedPac) pending and the next scheduled repayment date drawing near.

"However, should new debenture money reach substantial levels and demonstrate stable patterns, there is scope to revisit our rating accordingly in the longer term," S&P says.

FedPac plans to commit $3 million by June 30 and a further $3 million in September secured by GFNZ receiveables and with GFNZ providing a 20% equity buffer.

S&P says GFNZ needs this funding to meet about $5 million in scheduled debt repayment in September and, although the deal is progressing, "it is not legally binding on FedPac at this stage."

O'Connell says he has "no reason at all" to doubt the FedPac funding will be forthcoming.

S&P analyst Harry Hu says the negative watch "indicates that we believe there is a 50% probability of the rating being lowered in the short term.

"Over the longer term, and conditional on the receivable finance deal being successful, there is scope for an upward revision, should new debenture money reach a substantial level and demonstrate a sufficient level of stability," Hu says.

O'Connell says his company is "focused on good quality lending, focused on collecting our old ledgers and focused on our goal of making sure our debenture holders are repaid."

In late March, GFNZ repaid $2.5 million in principal to its debenture holders and another $2.5 million to Bank of Scotland. Since its November 2007 moratorium, it has paid both its bankers and debenture holders $38.5 million in interest and $64.3 million of the $126.7 million in principal it owed the debenture holders.

FedPac operates throughout the Pacific and has ties to Ireland's Fexco.


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