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Dominion Finance Shares Plunge, But Says Plan Well Received

Fuseworks Media
Fuseworks Media

Wellington, June 19 NZPA - Shares in stricken finance company Dominion Finance Holdings (DFH) slid 76 percent to a record low after trading resumed following Tuesday's suspension.

DFH shares closed down 38c to 12c, recovering from an earlier low of 10c, with 1.1 million shares traded. They have fallen from a record high of $2.86 in May 2007

The company was considering a moratorium on payments to debenture holders after becoming concerned about the liquidity of its two subsidiaries, Dominion Finance Group and North South Finance.

At March 31, debenture holders were owed $276 million, and funded around 60 percent of the company's assets.

DFH had asked Korda Mentha for strategic advice earlier this month, and yesterday engaged them and Chapman Tripp to provide expert assistance relating to a moratorium.

Important stakeholders had been open to the prospect of a moratorium, which would take some weeks to be developed, the board said.

A number of stakeholders had to be consulted, including trustees, banks, shareholders and potential equity providers.

NZX declined DFH's request to suspend trading in the company's shares and listed capital notes at its discretion, despite DFH's concerns about potential breaches of confidentiality arising from discussions with other parties.

The exchange operator is investigating whether DFH breached continuous disclosure rules about its situation before two of its subsidiaries fell into strife.

There have also been questions raised over the timing of DFH's latest attempt to raise more cash.

In a letter dated May 23 it offered investors an "exclusive special" interest rate for secured first ranking debentures at between 10.75 percent and 11 percent for up to 18 months.

The company's letter said it was continuing to operate its business as usual and was making good profits.

More than 20 finance companies have failed in the last two years, in part reflecting the effects of a global credit crunch.

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