GENERAL: NZF: Proposal to liquidate NZF Group Limited |
04:50p.m. |
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NZF |
03/04/2014 16:50 |
GENERAL |
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REL: 1650 HRS NZF Group Limited |
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GENERAL: NZF: Proposal to liquidate NZF Group Limited |
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NZX Limited |
WELLINGTON |
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Completion of sell down of business assets and proposal to liquidate NZF |
Group Limited |
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The last six years have been a very challenging period for NZF Group Limited |
("the Company"), its shareholders, and the holders of Capital Notes. The |
Board appreciates the support that it has received to date in these trying |
circumstances. |
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As advised to the market in August, the Board has been very focused on |
developing and implementing an inclusive strategy in conjunction with the |
Company's stakeholders to preserve value for those stakeholders and achieve a |
positive financial outcome for those parties. |
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During the course of the last ten months the Board has completed the sell |
down of its primary business assets: |
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o in June 2013, the Company sold its interest in MPMH Limited for an amount |
of $2,762,000 plus the repayment of the Company's loan to MPMH of $305,904; |
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o in November 2013, sold its interest in Resimac NZ Home Loans Limited and |
certain subordinated notes for an amount of $1,250,000; |
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o sold its interest in New Zealand Mortgage Finance Limited for $95,000 on 31 |
March 2014. |
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In addition to the realisation of the above assets, the Company has had to |
pay the following principal sums in settlement of certain obligations of the |
Company: |
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o in 2012 the Company was required to pay the sum of $283,319 to the |
receivers of NZF Money Limited on account of an intercompany loan between the |
two companies; |
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o in 2011, the Company paid $900,000 to the receivers of NZF Money on account |
of a subordinated note owed by the Company; |
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o in 2013, the Company settled a prospective $3 million claim from the |
receivers of NZF Money Limited for $975,000; |
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As a consequence of the settlement of the above liabilities and obligations, |
and the completion of the sell down of the Company's principal business |
assets, and the realisation of those assets for cash, the Board worked very |
hard towards developing a restructuring proposal which comprised the |
following core components: |
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o The early redemption of the Notes for a combination of the payment of in |
excess of 90% of the cash reserves held by the Company to the Noteholders, |
and the issue of new shares in the Company to the Noteholders; |
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o The restructure and re-focus of the Company on a new commercial strategy |
and the acquisition of a new business. To this end the Company was well |
advanced in facilitating the acquisition by the Company of a substantial |
internationally focused business; |
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o The target business in question was a significant enterprise, generating |
revenues in excess of $100 million per annum. The business was also very |
profitable. The discussions between the Company and the stakeholders of this |
business were well advanced - both parties had satisfactorily undertaken |
their respective due diligence investigations on each other, and a draft |
agreement for the sale and purchase of this business had been circulated |
between the various parties. |
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The focus of the above proposal was to generate a materially greater return |
to Noteholders and some form of return to the existing shareholders of the |
Company in the medium to long term than would otherwise be realised if the |
Company was liquidated. |
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The proposed restructure required the approval of both the Noteholders and |
the shareholders of the Company. |
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In respect of the documentation required to be submitted to the Noteholders, |
the Company was required to prepare and submit to the Noteholders a |
registered prospectus that complied with both the First Schedule of the |
Securities Act 1978 and the Securities (Moratorium) Regulations 2009. One of |
the requirements of the Securities (Moratorium) Regulations 2009 was that the |
Company needed to include into the Prospectus certain prospective financial |
information about the Company post the completion of the proposed restructure |
of the Company. That prospective financial information is required to be |
audited. |
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As announced to the market several weeks ago, RSM Prince resigned as auditors |
of the Company. This put the Company in the unenviable position of having to |
find a new auditor on the cusp of entering into a substantial restructuring |
proposal only a few weeks before the end of the financial year of the |
Company. |
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The Board has had discussions with a significant number of audit firms. There |
have been refusals from all but one firm which derives from the legacy issues |
associated with the company, namely the failure of the Company's finance |
company operations and the associated litigation and regulatory |
investigations associated with that failure, and the inability of the Company |
to repay the capital notes in full. |
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These uncertainties with appointing an auditor have led to the discussions |
with the target business now ceasing. |
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This unfortunate development has led the Board to the following conclusions: |
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o The Company will be unable to submit a restructure proposal to the |
Noteholders in a timely manner with further investigations for a new business |
required; and |
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o If the Company is unable to enter into a scheme with the Noteholders for |
the restructure of the Notes in the near future, the Company is not a viable |
commercial proposition, and the only foreseeable alternative the Board has is |
to: |
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- work with the trustee of its capital notes with a view to distributing the |
majority of the cash that the Company holds to the Noteholders as quickly and |
as efficiently as possible (but subject to applicable law and regulatory |
requirements); and |
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- recommend to shareholders that the Company be liquidated. |
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The Board is very disappointed that its efforts to implement the proposed |
organisational structure of the Company restructure of the Capital Notes have |
had to cease as it believed that the proposed restructuring would have |
contributed a significant quantum of value to the stakeholders of the Company |
- shareholders and Noteholders alike. |
The Board will proceed to call a special meeting of shareholders of the |
Company with a view to expediting the above initiatives. Further information |
about the proposed wind down of the Company will be contained in the |
documentation to be circulated to shareholders. |
As the Company has negative equity the market is cautioned that the Company's |
shares currently have no value and if the liquidation is approved, no |
prospect of having value. |
END |
Contact: |
Sean Joyce |
M: 021 865 704 |
E: sean@corporate-counsel.co.nz |
End CA:00249107 For:NZF Type:GENERAL Time:2014-04-03 16:50:33 |
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