NZF Group (NZF and NZF010)

[QOH]

I own some but admit I didn't really do my homework on them. Can you tell me if they are repayable next year or do they convert to shares ? The yield on them seems too good to be true assuming NZF lasts until next year.

[Enumerate]

Can you tell me if they are repayable next year or do they convert to shares ? The yield on them seems too good to be true assuming NZF lasts until next year.

Yes, they mature on the 15/3/2011. The company may elect to either pay back the face capital ($1) or convert to shares based on a VWAP type calculation. (Details are in the Trust Deed - accessible on www.companies.govt.nz).

Your point about the amazing yield is also an interesting observation (they have been trading between $0.50 to $0.75 of face value).

The recent S&P rating, at B, does not allow NZF Money to continue with the government retail deposit guarantee. The main reason for this is the weak capitalisation of NZF Group, the holding company. The company has an S&P rating, by the deadline - they have until some time in October to recapitalise NZF Group to BB, to continue with the guarantee. (At BB the guarantee is expensive - 1.5%).

NZF is largely bank funded, has avoided massive property development losses, has a major backer (Huljich), minimal related party loans, and has exposure to property through retail 1st mortgages.

My personal feeling is that this company, with decent capitalisation, will be a candidate for a banking license.

[QOH]

Thanks enumerate, I guess they will issue shares instead of paying it back then. That will teach me to do my homework. I had assumed they were just an ordinary debenture. Having said that NZF have always treated me well when I've been a debenture holder, I hope they do survive.