NZF Group (NZF and NZF010)

[invessi]

Yep, start reading the last rites for this one - once Derryl and Peter (S&P) get their hooks into constant downgrades, and negative creditwatches, they don't have a show. They will be reporting to S&P weekly, with reviews now monthly

This reads exactly as it did with SCF - positives are highlighted by those charged with saving the institution - no lending until stabilised, buyers in the wings, retention rates holding up well, continue to meet all obligations - but at the end of the day 58% of the debentures are being repaid each and every day, asset sales won't keep up with outflows and usually a CCC negative is the death knell.

bye bye NZF IMO

and if you think it can't happen to Wrightsons Finance, Marac, and the like, think again - these books are crumbling around their ears

This is unsubstantiated speculation on your part, the S&P statements are "cover your butt", just in case and I think you know it, S&P's statements are both negative and positive, so like I say, cover your butt stuff!

This statement is what matters in my view:

"The company's forecast liquidity position was based on a number of
unconditional sales contracts in place that are due to settle in the next two
months, which would result in the company sitting on significant cash
reserves.

As a result, the company anticipated returning to new lending within the next
6 months on current forecasts. The company also continued to comply with all
of its Trust Deed covenants and ratios, including its Capital Adequacy Ratio,
Gearing Ratio, Liquidity Requirements and Related Party Exposure Limits."


I also think you are misguided regarding Marac, they lend on plant and equipment and they provide lease arrangements, this is relatively safe lending, they have a large war chest and they are now part of the Heartland Group.

I think there might be a few NZF share bottom feeders on this thread!!!!

[Tony Two Gloves]

Invessi, Invessi firstly good to see you back after your little lesson in the difference between NZF Money, NZF Group, boards and directors etc.

I would assume you are a shareholder in NZF as you are so positive that everything is ok and the fact that the directors drive reasonably priced cars makes them a good bet. However how can you possibly be positive about a credit downgrade, a market cap that has reduced from $11.5M on the 01/02/11 to a market cap today of $3.8M and a cash flow crisis. If you have no cash you cannot lend and it is very unusual that a due diligent partner would require this to happen as part of the due diligence exercise which apparently commenced well over a month ago. Unless of course they are a receiver, even the SCF receiver has allowed them to keep making loans.......

[Tony Two Gloves]

BTW Marac has a bit of exposure to the commercial market / development deals thru its subsidary Ascend Finance and I agree with Xerof that book is complete S***. I read the article on deposit rates.......surely phrases like "Could be downgraded to a "D"", "Material rise in past due assets", "liquidity delicatel poised" should give cause for grave concern?

[QOH]

It has a similar feel to ALF, if Mini's figures come out around those levels that would be around 54M new shares issued. I think once note holders get those shares as with ALF the one's that sell early will get the best price. The one's that hold will see a gradual decline espically if the S&P rating heads further south and the banks start re assessing their position with NZF as the debenture holders have.

.

Totally agree re getting out quickly. Having been in the same situation with ALF the 10-11 cents I got for my Hanover conversion by getting out asap, is a lot better than the poor people still holding.

[minimoke]

Totally agree re getting out quickly. Having been in the same situation with ALF the 10-11 cents I got for my Hanover conversion by getting out asap, is a lot better than the poor people still holding.

Its death by a thousand cuts. ALF is now down to an all time low of $0.013.

NZF appears to be following a similar path. How anyone can see a two notch credit rating cut from B to CCC with NZF Money (and a negative credit watch) as a positive is beyond me - it has to impact on NZF. This positiveness is jsu thte same as we saw with LAF and SCF - don't we learn?

Anyone know what their exposure to Christchurch is? If the unconditional sales relate to anything to do with Christchurch expect to see Force Majeurs and a delay in loan repayments

[Enumerate]

For me, the lowering of the NZ Money credit rating is not good news for either of the choices I can make regarding "electing to convert to new notes" or "take equity".

I doubt very much if the seniority of the new notes gives me any capital preservation advantages in the event of a failure of NZF Group.

I also think that any likely discount that applies to equity would also apply to the new notes.

Hobson's choice ...

[invessi]

TTG, you are starting to expose your hand here, as I previously stated, you would seem to know the culture of the S&P people in which case you will know that they can create a lot of distortion and their rules do not allow them to use current data, they got so much flack in America after the fall out that they are gun shy, my interest in the company is the bonds, they rank above a conversion to a shareholding so why would investors want to convert bonds to shares?? I think you will find that most bondholders will take the 5 year renew.

[Tony Two Gloves]

Well I agree that most probably will and I suppose most already have. I suppose you could argue if the company isn't not going to last another five years, convert to shares and sell asap. I think this would result in a loss of 30% - 50% of your capital, as I think the share price will slump further. However, in a liquadation I believe the bond holders would walk away with very little espically if as S&P state the loan book has deteriorated materially. Not sure what you mean by showing my hand....I have nothing to do with S&P, I think it was Xerof who appears to be on a first name basis with them.

I can't seem to understand why you are so optimistic about NZF when the news and the facts are all bad. Bond holders have a decision to make and in my opinion neither option is particularly appealing.

[minimoke]

OK, too tired to work this out myself. In their 28/2/2011 announcement NZF say "shareholders to consider the issue of up to a maximum of 56,135,496 fully paid ordinary shares". After todays $0.05 trade I have the 95% VWAP at $0.055 which gives 66.2m shares if 18.4% of note holders convert to shares. What happens to the 6m shares difference?

(the revised VWAP gives noteholders up to 46.3% of the company)

Edit. As an aside, if someone has $6,000 and can pick up 150,000 shares at $0.04 this shifts the 95% VWAP to $0.047 giving noteholders 50.51% of the company.

[invessi]

TTG, my apologies, it was Xerof

Well I agree that most probably will and I suppose most already have. I suppose you could argue if the company isn't not going to last another five years, convert to shares and sell asap. I think this would result in a loss of 30% - 50% of your capital, as I think the share price will slump further. However, in a liquadation I believe the bond holders would walk away with very little espically if as S&P state the loan book has deteriorated materially. Not sure what you mean by showing my hand....I have nothing to do with S&P, I think it was Xerof who appears to be on a first name basis with them.

I can't seem to understand why you are so optimistic about NZF when the news and the facts are all bad. Bond holders have a decision to make and in my opinion neither option is particularly appealing.