Wellington, Nov 20 NZPA - Hanover Finance is aiming to repay most of hundreds of millions of dollars it owes investors within five years, under a debt restructure proposal announced today.

The proposal is to be put to a vote of investors at Auckland on December 9.

Among the aims of the proposal, Hanover wants to retain "management's significant expertise in property and property financing".

Details released today confirmed that shareholders Mark Hotchin and Eric Watson will inject up to $96 million of cash and property assets, provided investors back the proposal.

Hanover said independent appraisals commissioned by the trustees on behalf of investors, and undertaken by PricewaterhouseCoopers and Korda Mentha, support the debt restructuring proposal.

It was thought investors would most likely recover more of their capital through implementation of the proposal than they would from receivership.

In July, Hanover announced it was suspending acceptance of new investments and the repayment of existing deposits as it worked on the restructuring plan.

Hanover said today that under the plan it aimed to repay all principal to secured deposit investors over five years through quarterly payments starting next March.

At the end of June, Hanover Finance had 13,800 secured depositors with $485.1m in secured deposits, and subsidiary United Finance had 2575 secured depositors with $67.5m of secured deposits.

The company is also planning to repay Hanover Finance subordinated noteholders 50 cents for each dollar of principal after all of the company's secured depositors are repaid their principal amounts.

Bondholders of sister company Hanover Capital would be repaid 50 cents for each dollar of principal after all Hanover secured depositors and subordinated noteholders are repaid their principal amounts.

At the end of June, 125 Hanover subordinated noteholders had $2.2m invested, while 1130 Hanover Capital bondholders had about $24.2m of bonds.

Details of the shareholders' support package included $36m of cash -- an immediate $10m to be held in a solicitor's trust account and applied to principal payment obligations when and if required, and $26m in cash to be applied to debt reduction in the Axis Property Group.

There would also be a commitment to provide a further $20m through personal guarantees from the shareholders that would become available if needed to meet the repayment schedule from 2010 onwards.

Another $40m of equity would be in a portfolio of property assets in Axis Property Group including, for now, sections and development land at Matarangi Beach in Coromandel and property in Queenstown, Christchurch and Auckland.

Hanover chairman Greg Muir said that, if investors supported the proposal, the cash and property assets were locked in. So investors would still get the benefit of those assets if the companies failed to meet their repayment schedules over the longer term and the trustees put them into receivership at a later date.

Also, the shareholders would only get to realise their investment in each company once the agreed repayment schedule was completed.

Mr Muir said Hanover believed liquidity difficulties being experienced throughout the financial sector would correct over time.

"Our objective then is to ensure that all borrowers, lenders and equity providers are able to survive in the interim and be there when the markets correct."

A series of investor meetings is to be held around the country in the next two weeks in the lead up to next month's vote.

Shareholder Mr Hotchin said he thought the restructuring package would provide Hanover and its various investor groups with the flexibility needed to come out of the current financial crisis in one piece.

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