(Pix available on www.nzpaimages.co.nz)

By Alastair Bull of NZPA

Auckland, Dec 9 NZPA - Hanover Finance investors have overwhelmingly accepted a five-year rescue plan to save the company from receivership.

Preliminary figures indicated that most investor groups gave more than 90 percent support to the proposal, which needed 75 percent to be passed.

Under the plan, the company is aiming to repay nearly 16,400 secured deposit investors their principal of more than $550 million within five years.

Shareholders Mark Hotchin and Eric Watson will inject up to $96 million of cash and property assets.

At the end of June, $485m of those investments were deposited with Hanover Finance Ltd (HFL), while about $68m were with subsidiary United Finance Ltd (UFL).

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

A PricewaterhouseCoopers report said the repayment plan was optimistic but gave investors a better return than if the company went into receivership.

More than 70 percent of investors in each class took part in the poll.

The largest group of investors, Hanover Finance secured depositors, voted 92.97 percent in favour. There was 94.15 percent support from United Finance secured stockholders, and 93.23 percent support from Hanover Capital bondholders.

Only the smaller group of Hanover Finance subordinated noteholders were close to the cutoff, with support coming from 75.76 percent of investors.

Hanover chief executive Peter Fredericson said the strong support was gratifying.

"None of us wanted to be in the position we are in today, but there is a view out there that this is the best way," he told NZPA.

Under the plan, investors will receive gradual payments of their capital every three months between now and 2013 . Payments will get larger towards the end of the period.

Hanover chairman Greg Muir said he believed the vote showed investors had confidence in Hanover's board, management, shareholders and trustees to work through the company's problems.

"Hanover is confident that the plan has every prospect of delivering on the repayment schedule endorsed by investors. We will be focused on achieving at least that outcome within the five-year term of the plan."

The plan will fall over if Hanover at any time fails to make two consecutive payments.

"We're not contemplating failure," Mr Fredericson said. "We will deliver this."

The vote followed a passionate meeting to vote on the matter at the Ellerslie Convention Centre in Auckland attended by about 1000 investors.

Several investors asked why they should trust Hanover's management given the predicament the company was in.

At least three people asked Mr Hotchin to add his property on Auckland's Waiheke Island and his home under construction in Auckland's exclusive Paritai Drive -- labelled "Parasite Drive" by one investor -- to the assets he is making available as guarantees.

Mr Hotchin said, after being asked for the third time, that the Waiheke Island property was already among the assets up for grabs.

Though he wanted to keep the Paritai Drive place as a family home, he said it could be sold i f it helped pay investors out in full.

However, a number of investors accepted PricewaterhouseCoopers' view that the rescue plan was better than receivership.

"At a meeting about this plan last Thursday I was very much against the restructure. I was very angry," investor Brian Earnshaw said.

"There were some who wanted to blame the shareholders and the directors. They wanted to punish someone and putting the company into receivership seemed like an ideal way to do so.

"But in receivership we can expect no better than 50 percent of our funds back, and we could be looking at five years or more. We should be looking for the best outcome for investors, which is to support the restructure."

Mr Muir said the company had been confident of success until July, when the collapse of the property market and failure of other finance companies put it under pressure.

Secured depositors and stockholders will receive their first repayment on March 15.

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