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.

[Enumerate]

NZF Group has the following segment and financial structure as at the full year end 2010:

Property Finance Division: Assets $73.5m Liabilities $59.0m Operating Income $3.5m
Home Loans Division: Assets $202.9m Liabilities $201.1m Operating Income $4.8m
Consumer Finance: Assets $8.3m Liabilities $6.0m Operating Income $1.5m
Financial Services Distn: Assets $10.2m Liabilities $2.1m Operating Income $2.4m
Management & Holding: Assets $23.3m Liabilities $20.6m Operating Income ($1.6m)

The Home Loans Division (consisting of NZF Homeloans and the Mortgage Trusts) is funded by "bank debt". I expect it's structure (and operating contribution) will be fairly static.

Financial Services Distribution (consisting of NZ Mortgage Finance and 50% of MPMH) suffered the big impairment losses - but it is mainly equity funded.

The Consumer Finance unit (70% of Finance Direct) and the Property Finance Division (NZF Money) are the two units funded by retail secured debentures. Both businesses appear to be perfectly viable as long as a suitable long term funding source can be found.

Roughly, it looks to me as if funding for about $224m of liabilities has been found - generating some kind of return.

It looks like $65m of liabilities are being "weaned off" retail deposit money. Generally speaking, these assets are generating a return - but it looks like the key problem is keeping up with the maturity profile of the borrowings. (As an aside - the consumer lending seems to have a very short maturity profile (good news - lend short, borrow long)).

I am guessing that current strategy is to reduce the asset exposures funded by retail deposit money. I expect that deal that is being currently negotiated is to introduce partner money secured over existing assets in NZF Money (in much the same way that the Homeloans division produced the mortgage trusts).

Summary Conclusions:

1) I think that the new subordinated capital notes do actually offer genuine capital preservation advantages over taking equity (given the level of equity present in the operating units)

2) I think that equity is actually attractive at current shareprice levels because the business is not completely reliant on the recovery of Mike Pero - the Home Loans division should generate a nice income stream, if consumer finance and property finance can sort their funding issues - these units should be highly profitable even given the current state of the real estate market.

3) The big problem is the cost and liquidity available through the secured retail debentures. If this problem can be sorted - NZF looks to be in reasonable shape. If, on this, we get a real estate market recovery - they look to be in good shape to achieve some growth.

4) They have a good amount of imputation credits - if they can sort the primary issue of funding source - they can make some good money - and shareholders can get a payout tax efficiently.

5) Speculation: The new BSH "Heartland" bank will have lots of retail deposits - NZF could be a takeover target for them, because the central NZF problem is funding available, profitable business.

Happy to hear any dissenting views - but, please, lets keep the discussion grounded in fact!

[Enumerate]

As an adjunct to the "analysis" - this is my thinking around the note election issue:

1) If I had shares - I would be selling them ... even at 5 cents. The main reason is the ALF effect - at current election levels of the notes, there will still be lots of converted shares for sale after the 15th of March. These shares will be "hot" - some people will take a 50% hit just to get some cash back, in my view.

2) There is a Hobson's choice for existing noteholders:

i) If you elect to convert, I think your capital will be generally safe if NZF fails. However, you must think of your new notes as some kind of "perpetual" preference share. I reckon they will not trade anywhere near par - I would suggest maybe 60cents on the dollar will be a realisable portfolio liquidation value. Your choice is to take 6% (bank interest - without anywhere near the security) and face precisely the same Hobson's choice in 5 years time (if you do get paid out in cash in 5 years - you would have been better off to take equity - because this means the business has recovered well)

ii) If you take equity - your capital preservation will take an immediate paper "hit" - as new shares flood onto the market. However, you do not have to sell - you can bank on the deal happening in the background to sort NZF Money's and by implication Finance Direct's retail funding dilemma. If this happens, I think you will see your money back in the medium term (though selling pressure will doubtless be a significant factor - the newly issued shares must be regarded as "overhang" for a number of years. You basically sacrifice an interest payment and some assurance on liquidation capital preservation for a possible medium term ability to sell the shares and get your money out.

Again, I call 'em as I see 'em - happy to entertain alternative viewpoints or to be corrected ...

[invessi]

Enumerate, nice to see that you have distilled the groups current financial makeup and made some informed and common sense comments. I would like to make a few predictions, mainly for the benefit of TTG and Zerof:

By far the majority of bond holders will renew, over 90% me thinks, why wouldn't they when they rank ahead of shareholders!

A new financial partner(s) will be announced soon

Most of the unconditional property settlements will occur over the next few months leaving NZF with some healthy cash reserves

MPM will launch with a bang!

Before the year is out, they will be lending on a renewed scale and may even consider paying dividends in 2012.



NZF Group has the following segment and financial structure as at the full year end 2010:

Property Finance Division: Assets $73.5m Liabilities $59.0m Operating Income $3.5m
Home Loans Division: Assets $202.9m Liabilities $201.1m Operating Income $4.8m
Consumer Finance: Assets $8.3m Liabilities $6.0m Operating Income $1.5m
Financial Services Distn: Assets $10.2m Liabilities $2.1m Operating Income $2.4m
Management & Holding: Assets $23.3m Liabilities $20.6m Operating Income ($1.6m)

The Home Loans Division (consisting of NZF Homeloans and the Mortgage Trusts) is funded by "bank debt". I expect it's structure (and operating contribution) will be fairly static.

Financial Services Distribution (consisting of NZ Mortgage Finance and 50% of MPMH) suffered the big impairment losses - but it is mainly equity funded.

The Consumer Finance unit (70% of Finance Direct) and the Property Finance Division (NZF Money) are the two units funded by retail secured debentures. Both businesses appear to be perfectly viable as long as a suitable long term funding source can be found.

Roughly, it looks to me as if funding for about $224m of liabilities has been found - generating some kind of return.

It looks like $65m of liabilities are being "weaned off" retail deposit money. Generally speaking, these assets are generating a return - but it looks like the key problem is keeping up with the maturity profile of the borrowings. (As an aside - the consumer lending seems to have a very short maturity profile (good news - lend short, borrow long)).

I am guessing that current strategy is to reduce the asset exposures funded by retail deposit money. I expect that deal that is being currently negotiated is to introduce partner money secured over existing assets in NZF Money (in much the same way that the Homeloans division produced the mortgage trusts).

Summary Conclusions:

1) I think that the new subordinated capital notes do actually offer genuine capital preservation advantages over taking equity (given the level of equity present in the operating units)

2) I think that equity is actually attractive at current shareprice levels because the business is not completely reliant on the recovery of Mike Pero - the Home Loans division should generate a nice income stream, if consumer finance and property finance can sort their funding issues - these units should be highly profitable even given the current state of the real estate market.

3) The big problem is the cost and liquidity available through the secured retail debentures. If this problem can be sorted - NZF looks to be in reasonable shape. If, on this, we get a real estate market recovery - they look to be in good shape to achieve some growth.

4) They have a good amount of imputation credits - if they can sort the primary issue of funding source - they can make some good money - and shareholders can get a payout tax efficiently.

5) Speculation: The new BSH "Heartland" bank will have lots of retail deposits - NZF could be a takeover target for them, because the central NZF problem is funding available, profitable business.

Happy to hear any dissenting views - but, please, lets keep the discussion grounded in fact!

[minimoke]

Again, I call 'em as I see 'em - happy to entertain alternative viewpoints or to be corrected ...
The sale of notes or shares is fine in theory - but this is an illiquid company. No-one has expressed an interest in the recent past to buy. Even if 90% roll over leaving $2m converting to shares there hasn't been much more than $50,000 worth of trades in the past few years. There hasn't been much activity in the notes either.

[Enumerate]

The sale of notes or shares is fine in theory - but this is an illiquid company. No-one has expressed an interest in the recent past to buy. Even if 90% roll over leaving $2m converting to shares there hasn't been much more than $50,000 worth of trades in the past few years. There hasn't been much activity in the notes either.

Another way of viewing things is that at 5cents per share it is better holding for a medium term 0.5cent per share annual dividend (fully imputed) rather and holding 1 dollar of notes for a 6 cent annual interest payment. (They should be able to do a 0.5cent dividend with a surplus of about $500k)

[Enumerate]

... and remember, we have to choose either new notes or extra shares ... the fact that both are illiquid does not help us in our choice.

[Tony Two Gloves]

Interesting comments guys, not to be negative but.......Enumerate you requested comments be kept grounded which is fair. Invessi whilst applauding this you then make four predictions mostly based on pure speculation. The facts are they have been downgraded for a reason, the detriorating loan book is a huge concern for everyone whether you hold debentures, bonds or shares. As we have witnessed over the last few years when S&P downgrades a company the writing is on the wall and very few recover. NZF has a one in two chance of being downgraded further to a "D", how would there bankers feel if this occurs? We are already seeing how the debenture holders feel and this can only get worse since the down grade.

I'm sorry but I feel the optomism regarding NZF is totally unfounded, don't get me wrong they are still around when others (not all) have failed but I feel they are clinging on by their finger tips. Again not entirely there fault, the markets they operate in are dreadful and I don't see an improvement in the short term, this company needs to start making money and I don't believe a new real estate venture is the answer. If they do fail debenture holders will be first in line not bond holders and if the loan book is a mess its not to often that I have seen debenture holders get all their money back lately espicially after secured lenders are repaid. I think we all know what would be left for note holders in this scenario.......

[blackcap]

This came out today.... does anyone know when the new notes start trading?

NZF
14/03/2011 15:20
GENERAL

REL: 1520 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) Capital Notes

NZF
14/03/2011
CAPITAL NOTES (NZF010)

NZF Group Limited (NZF) Capital Notes - Expiration of Notification Date for
receipt of Election Notices of NZF Capital Notes (NZF010)

The Notification Date for receipt of Election Notices for NZF Capital Notes
expired at 5pm on Thursday 10 March 2011. Acceptances for the "Renewal
Option" on NZF Capital Notes were 89.9% by amount. Capital Noteholders that
have not elected the "Renewal Option" will be issued ordinary shares in NZF
in accordance with the Trust Deed. The conversion price will be based on 95%
of weighted average sale prices of an ordinary share in NZF sold during last
20 business days immediately prior to the Maturity Date.

A resolution to issue up to 56,135,496 ordinary shares in NZF to provide for
Capital Noteholders that have not elected the Renewal Option" was presented
at today's Special General Meeting and was passed by a majority of NZF
shareholders. The number of actual shares to be issued will be determined at
close of business today. However, based on the recent prices of shares sold
and the level of Noteholders electing to renew, we expect the actual figure
of NZF shares to be issued, will be significantly less than the maximum
mentioned above.

Malcolm Lindeque
For and on behalf of the board of directors
Company Secretary
ENDS
End CA:00206773 For:NZF Type:GENERAL Time:2011-03-14 15:20:33

[minimoke]

I end up with around 33.4m shares bing issued or what will end up being around 30% of the company. This gives me an SP of $0.038 or if we add the $2m back in then an SP of around $0.057.

[Alan3285]

I end up with around 33.4m shares bing issued or what will end up being around 30% of the company. This gives me an SP of $0.038 or if we add the $2m back in then an SP of around $0.057.

Looks like the last trade before the numbers are struck was at 5.5c.

Alan.

[blackcap]

So does anyone know if the rolled over notes begin trading today or tomorrow? And the new shares.... are they issued immediately? Will be interesting to see if this improves liquidity and at what price they are issued and new shareholders are willing to sell at.

[minimoke]

Looks like the last trade before the numbers are struck was at 5.5c.

Alan.
Interesting how a $381 trade can drop an SP, and consequently the market cap, 8.3%! This final trade had a minor effect on the VWAP - dropping it just $0.0003


I ended up with a VWAP of $0.06366, 95% being $0.06048.

Current market cap = $4.2m

New shares to be issued = 33.339m
Total shares that will be on issue = 110m

[Tony Two Gloves]

Concur Mini it looks like approx 0.06 will be the price. I think this has been a good result for the company and the major shareholders who will still maintain a majority of approximately 55%. Would be interested to see what other members did? I'll go first......

I converted to shares as I think the bond price will be savaged more than the share price and the interest rate offered relative to risk was disgraceful. The downgrading was the last straw for me and I think exiting asap is the right move. I will be looking to sell out as soon as possible, just hope there are some buyers around current levels 0.06 would be nice but I don't hold out much hope.......

[Enumerate]

I converted to shares. I too think the bond price will be savaged - I will be looking for signs that the business has a clear growth strategy and will be looking to participate, long term, if I see that they have a clear vision of what they want to achieve and have the appropriate means to achieving it. Understanding the scope and intent of this new "partner" is key ... I will be reading the tea leaves carefully when these details emerge.

[blackcap]

I too think the bond price will be savaged but will be looking to buy these once I see that the company looks "safe". Will be looking at between 25-50 cents for $1 face.

[blackcap]

Hard luck TTG... looks like the shares are offered at 4.5 cents for plenty. This means that the bonds are going to be very very heavily discounted as well. maybe even 10-20 cents but that will depend on the going concern assumptions for the company as well.... hard times ahead methinks

[Tony Two Gloves]

Bugger! I agree Blackcap, best buyer is now at 0.01 so what will this do the bond price - maybe that death spiral is starting to unfold?? Looks like i'm going to need another plan, in reality Debentures would have been a better bet than these bonds......

[minimoke]

New shares to be issued = 33.339m

I wasn't too far out: 33,290,954 actual new shares to be issued

Edit Didn't realise there were 20,050,000 notes - thought there were 20m. Also I make 10.1% to be a bit different from NZF. Oh well close enough for the exercise.

[Tony Two Gloves]

I see there major shareholder John Callaghan has just resigned from all directorships in the NZF group.....it's all happening today !!

[minimoke]

Bugger! I agree Blackcap, best buyer is now at 0.01 so what will this do the bond price - maybe that death spiral is starting to unfold?? Looks like i'm going to need another plan, in reality Debentures would have been a better bet than these bonds......
First NZF020 bid is for 5,000 at 100. Someones having a go!

[Alan3285]

First NZF020 bid is for 5,000 at 100. Someones having a go!

Doesn't seem worth the brokerage or am I missing something in the maths? That would be less than $400 worth, or am I out by a factor of 10 or something?

Disclaimer - Not at my calculator, so doing it in my head.

Edit: Forgot that Windows has one - it seems to agree, but I may be doing it wrong.

Alan.

[Newman]

Doesn't seem worth the brokerage or am I missing something in the maths? That would be less than $400 worth, or am I out by a factor of 10 or something?

Disclaimer - Not at my calculator, so doing it in my head.

Edit: Forgot that Windows has one - it seems to agree, but I may be doing it wrong.

Alan.

Buying 5000 NZF020 notes at 100% will cost $359 plus brokerage.

It is strange that nobody wants to sell the notes. Whether you can place an order to sell is a question to be found out. Remember you can neither buy nor sell NZF010 a few weeks ago.

[Enumerate]

NZF020 at 100% is worth about 7.2cents per note, according to the NZX site.

Why does NZX persist with interest rate traded bonds - much easier to deal with price traded entities ....

[minimoke]

First NZF020 bid is for 5,000 at 100. Someones having a go!
Must have been dipping their toes and found it to cold. Bidder now gone

[blackcap]

haha that was me trying to see if they would accept orders.. But may reenter in a day or 2, probably next week. But realistically the yield play and bidding in % terms is perfect for most bonds. But when the variance is too far from the coupon it does become rather silly.

[Tony Two Gloves]

SP has just dropped 33% to 0.03, is this the begining of the death spiral Enumerate?

Well I suppose the death spiral really started around the 0.20 mark which NZF clung onto for some time....

[minimoke]

SP has just dropped 33% to 0.03, is this the begining of the death spiral Enumerate?

Well I suppose the death spiral really started around the 0.20 mark which NZF clung onto for some time....
Its below the $0.038 I thought it would come in at and well below the $0.057 if the $2m had been added back in. Still its only a $119 trade. The last of the big spenders are out in force!

[winner69]

Its below the $0.038 I thought it would come in at and well below the $0.057 if the $2m had been added back in. Still its only a $119 trade. The last of the big spenders are out in force!

Might be a start fo the rush though

Market cap at 3 cents is $2.3 million .... big spenders don't count ..... heck ALF is worth over $20 million

[Tony Two Gloves]

Good comparison Winner, what shares would we all rather hold at say 0.012 ALF or NZF?

This time I won't go first because I don't know. I think the surprises are probably all just about out of the ALF book, not so sure about the NZF book. Would be interested in views....

[minimoke]

Good comparison Winner, what shares would we all rather hold at say 0.012 ALF or NZF?

This time I won't go first because I don't know. I think the surprises are probably all just about out of the ALF book, not so sure about the NZF book. Would be interested in views....
Don't know about ALF - its hit an all time low of $0.012 today.

You need a third option. NZF, ALF or a smack in the face. I reckon the third is the gentlest.

[invessi]

Not a good comparison, ALF is rooted, not so NZF!

[Tony Two Gloves]

The market still values ALF at over 10 times the current value of NZF Invessi, I know you are exteremly optimistic about them, based on what i'm not to sure, possibly a large share parcel??

If NZF was a good bet why isn't someone snapping up the 300,000 shares at 0.045??

LOL Mini, at least with a smack in the face you may see it coming.......

[Enumerate]

If NZF can reduce reliance on retail debt funding (which, as pointed out before, is NOT the most significant of their funding sources) they should be able to:

- clear about $10m in operating earnings, per year
- show some growth prospects in all of their categories of finance activity

With the new shares, they have a market capitalisation of about $5m?!?

The new notes, at about $20m, give them an extra margin of about $600k over the cost of the prior notes issue (plus the approximate $2m new equity contribution).

You have got to admit that directors will be well pleased with the outcome of the notes rollover.

Valuation of finance companies or banks is not done on assets. As long as they meet capital adequacy provisions, as long as their funding sources are secure (and, hopefully, long term) - they should be valued on EDBITDA. We will see if the two prior conditions can be met when we are allowed to finally understand the role of the new partner in funding the company. If this is good news - I would expect a re-rating in baseline valuation.

Would you pay about half annual expected operating surplus to own an established finance company at this point in the economic cycle?

[Enumerate]

I think that the resignation of John Callaghan probably foreshadows the seriousness of his illness. I have never met him but have exchanged emails with him a couple of years ago. He was polite and courteous - responded very fully to a "half baked" idea that I put to him. He did not need to do this. In hindsight, he was probably dealing with his illness, though this was not public knowledge.

I regret, very much, that he is unable to continue in a role as director for the firm. I think alot of the "culture" of NZF comes down to the character of the principals. I was very impressed, at that time, and now am simply saddened by recent developments.

I hope this "retreat" will signal a future "advance" - a return to health and the firm.

[invessi]

I would not be too concerned about this, one of the founding executive directors is still at the helm and they have the same executive team that have been with the company for some years now, nearly all of them are ex bankers!


I think that the resignation of John Callaghan probably foreshadows the seriousness of his illness. I have never met him but have exchanged emails with him a couple of years ago. He was polite and courteous - responded very fully to a "half baked" idea that I put to him. He did not need to do this. In hindsight, he was probably dealing with his illness, though this was not public knowledge.

I regret, very much, that he is unable to continue in a role as director for the firm. I think alot of the "culture" of NZF comes down to the character of the principals. I was very impressed, at that time, and now am simply saddened by recent developments.

I hope this "retreat" will signal a future "advance" - a return to health and the firm.

[Tony Two Gloves]

I agree Invessi I wouldn't be concerned about that, I would be more concerned about

1 The S&P downgrading and potential future downgradings
2 The disappearing funding options for this group - Debenture holders and bankers all want their money back
3 The lack of profitability and a clear path forward towards profitability for each of the business segments.
4 The resounding silence from NZF about the potential partner, an extremely long due diligence for a company with 19 loans! Will it be a "White Knight" or "Good Night"
5 I hear things are so bad they have even turned off the light at the end of the tunnel :)

Apart from that, nothing to worry about.....

The company has struggled since the departure of Callaghan who in my opinion was the driving force. Without him they would have never got off the ground and got listed. I don't see anyone driving this company in any of their business segments, they are lacking leadership and direction. Maybe there is a reason they are EX bankers ??

[invessi]

NZF
21/03/2011 15:58
ALLOT

REL: 1558 HRS NZF Group Limited

ALLOT: NZF: Issue of Securities

21 March 2011

MARKET INFORMATION

NZF Group Limited (NZF) - Issue of Securities

Announcement in terms of listing rule 7.12.1

Please be advised of an issue of securities as follows:

a) Class of Security: Ordinary Shares (fully paid and quoted).
b) Number issued: 33,290,954.
c) The issue price: 33,290,954 shares at NZ$0.061.
d) Payment was settled in full by way of conversion of NZ$2,030,750 NZF010
Capital Notes.
e) See d).
f) The percentage of the total Class of Securities issued: 30.28%.
g) The reason for the issue: Ordinary Shares were issued to NZF010 Capital
Noteholders who did not elect to renew their Capital Notes on 15 March 2011.

h) The specific authority for the issue: Ordinary Resolution to issue up to
56,135,496 Ordinary Shares passed at a Special General Meeting of
Shareholders on 14 March 2011.
i) The terms or details of the issue: The 33,290,954 Ordinary Shares issued
rank
pari passu (equally) with all existing Listed Ordinary Shares.
j) Total number of securities in this Class after the issue: 109,957,622
Listed Ordinary Shares.
k) N/A
l) Date of issue: 15 March 2011.
End CA:00207063 For:NZF Type:ALLOT Time:2011-03-21 15:58:38

[Tony Two Gloves]

Hard to get a handle on what's happening with the SP at present, at 0.03 its a 50% loss of capital if you converted which is better than the current offers on the NZF020 with the best buy at 65% would lead to an 86% loss of capital - but not much is trading on either as per usual. I wonder if we will see the ALF scenario of the SP gradually declining... I personally don't think it will be that bad as the company only issued an additional 50% of the shares that were on issue unlike ALF where the numbers were mind boggling. Looks like everyone is playing the waiting game and I wonder in a few months if we look back at the 0.03 and say that was a bargain or "Bugger, should have taken that".....

[invessi]

TTG, looks like the bond holders who converted to shares are in panic mode, they must think the company is going down and cutting their losses, I wonder who they are talking to for professional advise....not!!

Bids
Quantity No. Price
100,000 1 2.1
50,000 1 2
Asks
Price No. Quantity
3 3 420,888
4.5 1 303,834
5.5 1 409,836
7 1 81,967
9.8 1 3,000
10 1 45,000
Recent Trades
Price Volume Time Cond
3 200,000 11:50 SP



Hard to get a handle on what's happening with the SP at present, at 0.03 its a 50% loss of capital if you converted which is better than the current offers on the NZF020 with the best buy at 65% would lead to an 86% loss of capital - but not much is trading on either as per usual. I wonder if we will see the ALF scenario of the SP gradually declining... I personally don't think it will be that bad as the company only issued an additional 50% of the shares that were on issue unlike ALF where the numbers were mind boggling. Looks like everyone is playing the waiting game and I wonder in a few months if we look back at the 0.03 and say that was a bargain or "Bugger, should have taken that".....

[Tony Two Gloves]

Yeah there will always be those that have to sell so at 0.03 they are getting a hair cut that's for sure. Mind you if they retained their bonds and had to sell its almost a complete shave, rather than a 50% loss it would be around 85% loss - ouch !! Some interesting shareholder changes on the companies office website for NZF......

[invessi]

TTG,

4277392 shares

FNZ CUSTODIANS LIMITED Level 7, 256 Lambton Quay, Wellington, 6011 , New Zealand
--------------------------------------------------------------------------------


Allocation 7:4098360 shares

W CUSTODIANS LIMITED Level 6 Westfield Tower, 45 Knights Road, Lower Hutt , New Zealand
--------------------------------------------------------------------------------


Allocation 8:3168934 shares

David Burton GIBSON Suite 5a, 5 Parliament Street, Auckland Central, Auckland, 1010 , New Zealand
--------------------------------------------------------------------------------


Allocation 9:2744623 shares

NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED 2 The Terrace, Wellington , New Zealand
--------------------------------------------------------------------------------


Allocation 10:2216934 shares

Walter Mick George YOVICH 8 Barclay Place, Kamo, Kamo, 0112 , New Zealand
Jeanette Julia YOVICH 8 Barclay Place, Kamo, Kamo, 0112 , New Zealand


Yeah there will always be those that have to sell so at 0.03 they are getting a hair cut that's for sure. Mind you if they retained their bonds and had to sell its almost a complete shave, rather than a 50% loss it would be around 85% loss - ouch !! Some interesting shareholder changes on the companies office website for NZF......

[invessi]

Not sure what happened, did not get to finish my message, I was asking if these are the shareholders you were referring to and what is your take on it!


Yeah there will always be those that have to sell so at 0.03 they are getting a hair cut that's for sure. Mind you if they retained their bonds and had to sell its almost a complete shave, rather than a 50% loss it would be around 85% loss - ouch !! Some interesting shareholder changes on the companies office website for NZF......

[Tony Two Gloves]

Yep those were the one's and interesting some of the parties that had ceased to be shareholders (Kim Lyons, Peter and Christopher Huljich in their personal names).

Not sure what to make of it, I don't know much about the new parties but if they have the key to solving their funding dilemma then all good I suppose. What's your take?

[Enumerate]

No, they did not cease to be shareholders. They ceased to be listed in the top 10 on the Companies Office.

[Tony Two Gloves]

Yes your quite right, presumably these new shareholders would have been the larger bond holders that converted to shares?

[Enumerate]

.. presumably these new shareholders would have been the larger bond holders that converted to shares?



Yes, I think you are right.

[minimoke]

Yes your quite right, presumably these new shareholders would have been the larger bond holders that converted to shares?
So if we get this right we have the owners strategy since 26 Jan which has:
- screwed bondholders into accepting a misery 6% for very high risk
-seen the number of shares nearly double in an already illiquid market
- seen the SP plummet from $0.15 to $0.03
- given bondhlders a lesson in Hobsons choice
- and ultimately see them loose their Top 10 shareholder ranking which makes their positions on the Board tenuous.

The positive aspects of their strategy are................

[invessi]

TTG, I have been away for a few days, if you go the companies office website and click on the shareholder histroy tab, the other shareholders such as Huljich come up, by the way, Peter Huljich is currently the acting chairman for NZF Group.

I can only assume the new shareholders were bond holders who converted and they are now looking to sell for what they can get, foolish in my view!


Yep those were the one's and interesting some of the parties that had ceased to be shareholders (Kim Lyons, Peter and Christopher Huljich in their personal names).

Not sure what to make of it, I don't know much about the new parties but if they have the key to solving their funding dilemma then all good I suppose. What's your take?

[Tony Two Gloves]

Yes as Enumerate pointed out some of the bond holders that converted got so many shares they have now found themselves in the "Top Ten" shareholders in the company. The others I mentioned have simply slipped out of the top ten as there shareholding has been diluted. With Peter as Chairman there is still no independence on this board with all the directors being major shareholders, not a good look for a public company - I thought you said in a previous post that Craig Alexander was going on the board? In my opinion he would be mad to and maybe he has decided against this as i'm sure several other Independent Finance Company directors wish they had of as they are now feeling the price of receiving those director fees.

Mini - The only positives are.....well there are none for bond holders or shareholders, a small interest saving for the Company perhaps??

Invessi, the facts are if you converted and sold today you would lose 50% of your capital, if you retained your bonds and had to sell to day you would lose 80% of your capital - there was no "good" choice. So if you were in a position that you need your money back like you assumed you would get when you took these bonds, converting was the better of the two options, I suspect the majority of people will hold as they do not want to face the unpleasant truth of where this investment is at.

[minimoke]

I suspect the majority of people will hold as they do not want to face the unpleasant truth of where this investment is at.
If we look at ALF (and that is ugly - now at 1.1 cents, an all time low) holders were blinkered into thinking that rock bottom had been reached only to find new depths had yet to be plumbed. Holders of NZF will probably see the same SP trajectory.

[Tony Two Gloves]

I agree Mini, people are not lining up to purchase at 0.03, there are however plenty of sellers, in fact 1.2M of sellers and only 150,000 of buyers, hard to see this share holding at 0.03 for much longer. ALF at an all time low of 0.011, Geneva has just traded at 0.02 which is also an all time low and NZF is at an all time low. Anyone seen that Finance Company bull of a few years ago??? Interesting reading the comments at the start of the SCF thread from a few years back when words like "Quality" & "Conservative" etc were in abundance, how the mighty have fallen.......

[Tony Two Gloves]

It looks like NZF have sold their shareholding in Finance Direct, I think this is a good move as they don't have the expertise in the consumer finance area. The bad news is they would have taken a bath on the price, but it least it will put some badly needed cash back in the bank and they would have learnt a lesson - stick to your knitting !!

[invessi]

TTG, where did you get that information from


It looks like NZF have sold their shareholding in Finance Direct, I think this is a good move as they don't have the expertise in the consumer finance area. The bad news is they would have taken a bath on the price, but it least it will put some badly needed cash back in the bank and they would have learnt a lesson - stick to your knitting !!

[Enumerate]

Look on the Companies Office site for Finance Direct Ltd.

Removed Share Allocation
552410 Shares
NZF GROUP LIMITED
88 Broadway, Newmarket, Auckland

Amended Share Allocation
Previous:
236746 Shares
Tania Kim CROAD
Wayne Darrin CROAD

Updated:
789156 Shares

[invessi]

Yes, good move as there is not much scope for small finance companies with all the compliance requirements and costs, I understand FDL are primarily broking these days!


Look on the Companies Office site for Finance Direct Ltd.

Removed Share Allocation
552410 Shares
NZF GROUP LIMITED
88 Broadway, Newmarket, Auckland

Amended Share Allocation
Previous:
236746 Shares
Tania Kim CROAD
Wayne Darrin CROAD

Updated:
789156 Shares

[Tony Two Gloves]

I agree, small Finance Companies using a debenture funding model will find it near impossible to attract retail deposits. That on top of the compliance costs would make it near impossible to be profitable unless you had a significant book or large amount of equity. Finance Direct has neither of these.... I have had Debenture stock with them in the past but would not do so again espically now as they do not have a much larger parent supporting them. Not sure what the plan will be for them in light of funding issues I suspect they will continue to broker loans and wind the book down to the point they can cancel their Prospectus.

As to where I get my info.......Enumerate is on to it !! and of course a couple of well placed sources :)

[invessi]

Then you are probably aware that what I have elluded to in the past is coming to fruition1


I agree, small Finance Companies using a debenture funding model will find it near impossible to attract retail deposits. That on top of the compliance costs would make it near impossible to be profitable unless you had a significant book or large amount of equity. Finance Direct has neither of these.... I have had Debenture stock with them in the past but would not do so again espically now as they do not have a much larger parent supporting them. Not sure what the plan will be for them in light of funding issues I suspect they will continue to broker loans and wind the book down to the point they can cancel their Prospectus.

As to where I get my info.......Enumerate is on to it !! and of course a couple of well placed sources :)

[Enumerate]

http://www.nzx.com/news/4832824/Fisher-Funds-buys-Huljich-Kiwisaver

Huljich exits Kiwisaver ... he could probably buy all of NZF for a fraction of what he is likley to get from this sale.

Very interesting development.

[invessi]

2.9 ¢
(nzd) 0.1 3.3%

31/03 13:28 nzt

2.9 2 2.9 2.9 2.9 2.9 100,000 $2,900

[Enumerate]

I get the feeling that the Huljich move and the Finance Direct resolution signals some significant changes for NZF.

[Tony Two Gloves]

I think just a bit of house keeping to tidy things up and focus on their own issues. We still await further news on this potentail partner which has been dragging on for ages......

[QOH]

Did anyone roll over their notes to the 6% option?
Mine have suddenly vanished off my portfolio list at Direct Broking, and don't seem to be showing as a holding at Link services either.
I definitely returned the form with my choice .

[Enumerate]

Did anyone roll over their notes to the 6% option?

You should have a registry entry under NZF020 if you elected to convert your notes. Contact the registry - your broker portfolio list may not be automatically updated.

[Tony Two Gloves]

WOW - I have just read the amended Prospectus for NZF Money (http://www.business.govt.nz/companies/app/ui/pages/companies/868536/documents). I can now understand the SP decline and how close to tipping this company actually is. If anyone gets a chance to read it I would be interested in your thoughts as I think this is very bad news for shareholders and note holders.

[invessi]

TTG, there are certainly statements that indicate negativity, particularly potential for a further downgrade but I also feel a lot of this is fallback reporting, no one in the finance sector is going to issue bold statements and they are going to cover themselves for the things that can go wrong. Some key statements that would indicate a quite confidence are:

"NZF considers it is able to continue to satisfactorily manage its solvency"

"Should be lending again in 6 months"

"In 2 months, should be sitting on large amounts of cash from unconditional property settlements"

"Good debenture re-investment rates"

"13m in equity"

If the new financial partner is on board by the end of May which is what I am hearing, this should improve their standing with S&P!






WOW - I have just read the amended Prospectus for NZF Money (http://www.business.govt.nz/companies/app/ui/pages/companies/868536/documents). I can now understand the SP decline and how close to tipping this company actually is. If anyone gets a chance to read it I would be interested in your thoughts as I think this is very bad news for shareholders and note holders.

[Tony Two Gloves]

Time to polish those rose tinted glasses of your's Invessi......the Prospectus is based on "Facts" otherwise the directors wouldn't sign it. They have a large amount of non performing loans, their percentage of first mortgage secured loans has dropped significantly and they can't even find directors to come on board!! They also state that things might be much worse than stated which is what we are now seeing with the SCF book and they are starting to breach their covenants with the Trustee. The first three lines of your reply use words like "considers" and "should" which gives me zero reassurance that they will survive. I hope they do as I still have shares but I think they are set to join the "Finance Company Graveyard" unfortunately.

Will have to contemplete that buyer at 0.02 seriously, if he is still there......

[POSSUM THE CAT]

Tony Two Gloves How many do you have PM me I could be interested

[Tony Two Gloves]

Thanks Possum, have done so.

[Enumerate]

I read the NZF Money prospectus and trust deed and started buying! (It was me who took the 100k in late March).

NZF Money is the unit with exposure to retail debenture funding. This unit has been downsized aggressively ... (from $84m March 2009 to $34m March 2011).

As of mid-March NZF Money had $21m of secured retail debenture funding and $13m of equity funding!

I estimate that the Finance Direct sale puts them at about $15m of retail debenture funding and maybe at $15m of equity (in the NZF Money unit)!!

The bulk of their assets are elsewhere. The reason you buy this company is because the Home Loans division has $208m of assets funded by bank debt at $205m, insured and AAA rated. This generates about $4m in operating revenue year in, year out.

The Financial Service division with about $10m in assets and $2m in liabilities contains the Mike Pero activities. This unit can be depended on to generate about $2m in operating revenue.

If we acknowledge the pain (already booked in the accounts) of the impairments in the Property Finance division (NZF Money) and the Consumer Finance division (Finance Direct) ... I think we can look forward to at least a neutral contribution to next years accounts from the unit that remains (NZF Money).

I can see NZF Group generating at least $6m in annual operating surplus in 2012 and beyond.

Not bad for a company with a market capitalisation of $3m. This is the reason I am buying.

[Tony Two Gloves]

Interesting angle Enumerate. Finance Direct has a seperate Prospectus so the amount of debenture funding for NZF Money will remain unchaged. The NZF Money book has shrunk very quickly and I wonder at the quality of what is left. As the amendments in the Prospectus state a substantial amount is past due and they are vunerable in their second mortgage positions, even on some of their first mortgages thay have an arrangement with one of their own directors that he has priority on some loans - very strange. I was also a little shocked at the amount of "Bare Land" they have security over. From what I hear they lost well over $500K on the Finance Direct deal and there could be further significant impairments on a number of their assets including the Pero brand, i'm looking forward to seeing the accounts to assess the true picture.

Buying the shares at 0.029 is probably worth a punt and you have the cheapest shares in the Company as everybody else has a cost of 0.06 and above, so good luck!

[Enumerate]

Finance Direct has a seperate Prospectus so the amount of debenture funding for NZF Money will remain unchaged.

Yes, you are right - they are a separate division. I confused the consumer finance activities of NZF Money with Finance Direct. I should have added in the $6m of Finance Direct retail debentures to the combined NZF Money/Finance Direct borrowings ... the bottom line is that they currently have about $21m retail debentures with $13m plus whatever they cleared from Finance Direct in direct equity.

Collapsing a retail debenture finance business from about $84m to $34m and suffering $2m in impairments (with the potential for another $2m) has got to be judged as completely amazing - given this was done over 2009/2010!

They have $9.7m of intangible assets on the books (probably held as the assets in Management & Holding activities division). This was written down by over $6m in the last year due to revaluation of the Pero intangibles. The fact is that this could go to zero, over two years, and absorb the next two years profit. The fact remains that the profitability of the Home Loans division, alone, probably justifies more than this amount of intangible asset to be written back!

One final point - the effect of the issuance of the new capital notes had the effect of converting $2m of debt to equity. This saves over $180k pa in direct interest expense. Reduction of the note interest rates on the $18m of notes saves over $300k pa in interest expense. They have trimmed $500k pa in interest expenses - enough for a 0.5cent per share increase in NTA pa - a 16% increase.

[Enumerate]

I have attempted to support the view that NZF Group will survive its current difficulties - well enough to support a shareprice of about 15-20cents per share (market capitalisation of about $15m to $20m) in about 2 years time.

The key problem is not to simply survive, in the short to medium term, but to take advantage of the vast hole in the "bank fringe" finance market - and to show some significant growth prospects.

I am not convinced the Pero business is this vehicle for growth. I think it is a valuable brand and if supported by ideal processes and information technology - it will continue to be a valuable brand and source of contracts for the Home Loans division. The main fact is that the retail deposit market will only return to 2007 levels in the very long term. The Aussie banks have been gifted cheap retail money for a very long time to come.

I continue to be intrigued by the nature of this new "partner". If they can bring the loan liquidity ... NZF can find profitable niches for this money. This is the recipe for high growth rates as the mezzanine finance "vacuum" is filled following the carnage of the last 4 years.

[Tony Two Gloves]

I tend to agree that the home loan division and their RMB's programme should be their core focus. Ridding themselves of Finance Direct was a good move even though it has been an expensive exercise, pulling NZF Money back is also prudent as long as they don't take a bath on those non performing loans ($19.1M). As we have seen in the past if the non performing loans are really bad it can chew up all the equity quite easily, espically with second mortgages and bare land. If a new partner enabled them to ditch their debenture funding this would be extremely positive as I can't see this being to profitable with the added compliance costs etc.

What did you make of the "Loan Participation Agreements" with one of their directors?

[Enumerate]

What did you make of the "Loan Participation Agreements" with one of their directors?

I'd say that the opportunities for writing loan contracts that they turn out of the Mike Pero Mortgages unit are clearly better than their available capital/debt allows them to fund. Inviting in Director equity is not necessarily a bad thing. Depends if it is structured fully and formally ... "sweet heart" insider deals are the shortest path to losing credibility given recent events.

On the non-performing loan point - I am assuming that their impairment estimates are accurate. I note that the auditor did not tag the accounts, so I assume the auditor agrees with this view.

I am in this stock, to the extent I am and the price I am, because of the choice presented at capital note conversion. With the price collapse to 2.9cents - I think a bit of averaging down becomes attractive - though not without risk.

When we see the final year accounts and get some idea of how real this "partnership" is - then a more complete picture of NZF Group prospects will be evident.

[minimoke]

I think a bit of averaging down becomes attractive - though not without risk.

Oh dear, in some parts this is known as "Doing a Belg" - in recognition of an enthusiastic yet ultimately doomed strategy. Good luck!

[invessi]

I have attempted to support the view that NZF Group will survive its current difficulties - well enough to support a shareprice of about 15-20cents per share (market capitalisation of about $15m to $20m) in about 2 years time.

The key problem is not to simply survive, in the short to medium term, but to take advantage of the vast hole in the "bank fringe" finance market - and to show some significant growth prospects.

I am not convinced the Pero business is this vehicle for growth. I think it is a valuable brand and if supported by ideal processes and information technology - it will continue to be a valuable brand and source of contracts for the Home Loans division. The main fact is that the retail deposit market will only return to 2007 levels in the very long term. The Aussie banks have been gifted cheap retail money for a very long time to come.

I continue to be intrigued by the nature of this new "partner". If they can bring the loan liquidity ... NZF can find profitable niches for this money. This is the recipe for high growth rates as the mezzanine finance "vacuum" is filled following the carnage of the last 4 years.

Enumerate, I believe you are right on the mark, lets hope TTG does not panic and sell at 2 cents, much as we rib each other, I would still not like to see him take an avoidable bath!

[Phaedrus]

A nice simple chart eh?

Not a good advertisement for the virtues of "Buying and Holding" though!
To think that some people claim "It's time in the market that counts, not timing the market".
What absolute twaddle!

It is interesting how well a bog-standard 200 day Moving Average has worked with NZF, keeping you in when it was in an uptrend, and getting you out when the uptrend ended - before you gave too much profit back to the market. Most importantly though, see how it has kept you out of this absolute dog for 4 years (so far).

How is it possible to get 23 pages of earnest discussion on a stock with a chart like this?

I just don't understand!

http://i602.photobucket.com/albums/tt102/PhaedrusPB/NZF47.gif

[Alan3285]

Hi Phaedrus,

I'm not really a chartist, but always interested.

Where did you source the chart from?

Is it your own creation using source data? If so, would you be able to post the file (rather than an image)?

It is hard to see exactly what is happening at the 'sell' point you have indicated - is that an inflection point in the 200-day moving average, or something else?

Thanks,

Alan.

[Tony Two Gloves]

Well Phaedrus 23 pages and this is probably the only technical analysis comment I have seen! I guess the discussion started around the notes and the healthy debate over which option was the best in rolling over or converting to shares. The chart follows the rise, rise, rise and fall (spectacular fall)of the finance company sector in NZ.

Much as Mini will be disgusted i'm also considering an averaging down purchase as the thought of selling the converted shares now at 0.02 doesn't appeal. It might however be good money after bad......come on Invessi talk me into it :)

[invessi]

Well Phaedrus 23 pages and this is probably the only technical analysis comment I have seen! I guess the discussion started around the notes and the healthy debate over which option was the best in rolling over or converting to shares. The chart follows the rise, rise, rise and fall (spectacular fall)of the finance company sector in NZ.

Much as Mini will be disgusted i'm also considering an averaging down purchase as the thought of selling the converted shares now at 0.02 doesn't appeal. It might however be good money after bad......come on Invessi talk me into it :)

Well TTG, I hear from a reliable source that the new partner is likely to happen before 7 weeks are up and the two organisations are very well matched for future growth. My expectation is 20c to 30 c within 12 months

[blackcap]

Down to 2 cents this morning and now a buyer at 1.4 Not for the faint of hearted.... But a conversion price of 6 cents, and now a 2 cent share price should imply a bond price of 33 cents? So a ytm of about 100%?

[invessi]

This notices have been posted on direct broking but there are no attachments?
06/04/2011 SSH: NZF: SSH - (trustees of the Hillview Trust)
05/04/2011 SSH: NZF: SSH - (Best Investments Limited)
05/04/2011 SSH: NZF: SSH - (Peter Karl Christopher Huljich)

[Phaedrus]

Hi Phaedrus, is the chart your own creation using source data? If so, would you be able to post the file (rather than an image)?The chart was created with MetaStock software using vendor supplied data. If you want a .csv file of NZF raw data (Date, Open, High, Low, Close, Volume) one can be downloaded from Yahoo Finance :-
http://au.finance.yahoo.com/q/hp?s=NZF.NZ


It is hard to see exactly what is happening at the 'Sell' point you have indicated - is that an inflection point in the 200-day moving average, or something else?The red "Sell"arrows mark :-
(1) Where NZF broke below its confirmed trendline (green line) and
(2) Where NZF first broke below a 200 day Simple Moving Average.
(This is an indicator commonly used by conservative investors).

[Tony Two Gloves]

Hope your right Invessi, I am still a little mystified why this process has taken so long. I also believe that no potential partner would have required them to stop lending, whilst going through the Prospectus amendments it appears the real reason they stopped lending was they had no cash and no hope of raising bank funding.

[invessi]

Hope your right Invessi, I am still a little mystified why this process has taken so long. I also believe that no potential partner would have required them to stop lending, whilst going through the Prospectus amendments it appears the real reason they stopped lending was they had no cash and no hope of raising bank funding.

I don't think "no cash" is the reason, the wholesale funds arrangment with Westpac for home loan lending is still $225m from memory and we have not seen a notice that this has been withdrawn, I understand there have been a number of potential partners which is why the process has taken so long and the Christchurch situation was instrumental in delaying matters, I understand one of these potential partners required the halt in lending, not sure about the current suitor?

[Tony Two Gloves]

There goes the Chairman Invessi......I wonder if this will lead to some shareholder changes?

NZF Group Limited - Resignation of a Director

NZF Group Limited announces that following the sale of the Huljich KiwiSaver
business, Peter Karl Christopher Huljich has decided to resign Company
Directorships to focus on his private business interests

[invessi]

Yes, I was expecting that to happen!


There goes the Chairman Invessi......I wonder if this will lead to some shareholder changes?

NZF Group Limited - Resignation of a Director

NZF Group Limited announces that following the sale of the Huljich KiwiSaver
business, Peter Karl Christopher Huljich has decided to resign Company
Directorships to focus on his private business interests

[Xerof]

PH has also resigned from other directorships today, so wouldn't read anything 'NZF specific' into his departure.

Can anyone tell me when the Westpac facility is due for expiry or renewal? They are very vulnerable to them also departing, and I can't really find a compelling reason for Westpac to stay to be quite honest....

[invessi]

NZF
12/04/2011 13:26
GENERAL

REL: 1326 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) - Continuous Disclosure

NZF Group Limited (NZF) - Continuous Disclosure

On 2 February 2011, NZF announced that it was in the final stages of
negotiation with a new business partner, who we believed would be in a
position to offer NZF the most effective solution for its current and future
capital needs, in order to take advantage of growth opportunities that exist
within the Residential Mortgage Backed Securities market in New Zealand.

The process has taken much longer than originally expected due in part to the
negative ramifications of the Christchurch Earthquake but also NZF's desire
to secure the best possible long term business partner.

NZF is now in discussion with two parties and would expect to be able to
announce firm details of the preferred partner by 29 April 2011.

ENDS
End CA:00207947 For:NZF Type:GENERAL Time:2011-04-12 13:26:23

[minimoke]

oh dear - where have we heard all this before.

[invessi]

"Mr Huljich sold his interests in NZF down on 5 April from a personal holding of 4% to 0.92% and non-beneficial relevant interests from 11.06% to 7.16%"

This holding must have been sold off market, from memory, PH and friends outlayed about $13m for NZF shares, anyone got any comment on this!

see we are edging up again, last sale at 3c!

[Enumerate]

I am not sure Peter is selling any shares - the notices are an artefact of the conversion of $2m of notes thus altering the relative % holdings. Peter going from 4% to 0.92% is an artefact of his apparent transfer from a personal holding to Best Investments back in 2008.

Huljich interests must be cashed up from the recent sale to Carmen Fisher. NZF is trading at a significant discount to group NTA ... it would not surprise me in Huljich interests had some interest in broadening and deepening their relationship with NZF.

[Xerof]

The SSH notices reflect the dilution caused by those Note holders taking shares. PH has not sold. I agree with Enumerate to the extent that PH is positioned to perhaps have a go, but I doubt it is a compelling case for him to pursue

still think its touch n go, and my money sits on the table at this stage

[invessi]

Yes, well PH could average down I guess, he has good cause to do that in my view!


The SSH notices reflect the dilution caused by those Note holders taking shares. PH has not sold. I agree with Enumerate to the extent that PH is positioned to perhaps have a go, but I doubt it is a compelling case for him to pursue

still think its touch n go, and my money sits on the table at this stage

[Tony Two Gloves]

I think he probably has enough exposure to NZF for his comfort and his investment to date has been decimated by the current SP. I doubt he would have aspirations of owning his own finance company, looks to me like he has enough on his plate at present... At least he is now on the postive side with Diligent !

[COLIN]

Well, well! NZF today's best performer on the NZX! And I think that was the case also yesterday, from memory. The age of miracles is not dead!

Buying interest for NZF shares seems to have been aroused. Appears there are some who have grounds to believe that the promised 29 April announcement will be a rewarding one for NZF holders.

[Enumerate]

Maybe some confidence is returning now that the residential property market seems to be stabilising (or even recovering, if you are in Auckland!).

[Enumerate]

I hope that they are able to announce a new financial partner, today, as promised.

Further, I hope that this new partner is the new "Heartland" bank - BSH. I think that NZF could package up insured RMBS' and float these to the new bank - NZF has the efficient advisor network and the "back office" processes; BSH will give the aussie banks a run for their money in terms of attracting retail deposits.

If it is a substantial partner - I think the key problem to NZF prosperity would be solved. I think they have proven their risk policies and assessment processes are robust - the key problem is access to "wholesale" money to fund their lending opportunities.

Trading has been highly unusual - sellers appear on the market, rarely, and hold out for their price. I think we might see some volume if the shareprice heads over 6cents per share - this is where a number of NZF010 holders might "shake loose".

I would point out that 2.9cents per share is the NTA less intangibles (say, $3million). Following last years write down of the Pero intangibles - the current level is about $9million. Generally, I think this level of intangibles is justified - they have some very nice business units generating operating surplus not taking up much equity to fund. Hence, some level of intangible asset is justified. Net assets, including intangibles, is about $12million (or about 12cents per share).

I am expecting the final year accounts for March 2011 to justify a shareprice of about 12-15 cents. This will be justified on cashflow rather than profit.

I think that March 2012 will be forecast as a profit. I think the company in it's present configuration could recover to a $5-6m annual profit by about 2013. This would justify a shareprice of about 25-30cents.

There are huge opportunities for growth as one of the "last men standing" in the finance sector. It is an extreme pity that Huljich is no longer on the board - I think he has the energy and vision to engineer significant growth.

[invessi]

Enumerate, I think you are generally on the mark but do not underestimate the energy of the core team, there is plenty of that and Mark Thornton is very motivated to get the share price back up, from my observation, J Callaghan was a good thinker but he was a person that would only do things his way and that caused missed opportunities, he was not good at deferring to others who may have had a better knowledge and understanding. My anticipation is that future performance will be factored into the share price and it will be back up to 20c or more in no time! Interested now to see if TTG has changed his mind about matters!

[Enumerate]

Invessi, thanks for the observations on the capability of the management team. My intention was not to depreciate those currently in place - to be frank, I have no direct knowledge of them. I am impressed by what Huljich and team achieved at Diligent (I have followed this stock for some time) and at HWM. For the record, I hope that the Kiwisaver debacle can be resolved fairly - I, for one, do not believe that PH intended manipulation but was motivated by the desire to correct a fault in a non-kiwisaver fund. This speaks, to me, of integrity. I think he is a big loss to NZF.

Those people I have had some distant background information about, at NZF, have impressed me.

All power to Mark Thornton and team! I am prepared to be impressed by them, as well. I would say that given the state of the market and recent competitor collapse; Thornton and team have the opportunity of the century to demonstrate a remarkable turnaround in the fortunes of NZF.

Apart from organic growth following the recovery in the property sector - the elephant in the room is that status of the SCF loan books!!

[Tony Two Gloves]

I like Enumerate will await the accounts before making any concrete conclusions. They still have big issues to overcome on a few fronts but hopefully in time they will do this, I think it will be more a long term recovery rather than 12 months.

One thing I can't understand Invessi is why you didn't convert to shares if you can see the SP back at 0.20 surely that was a great opportunity rather than the misely interest rate offered on the bonds?

[Tony Two Gloves]

Lucky no one was holding their breath.......

As indicated in our last Market Announcement dated 12 April 2011, we expected due diligence to have been completed by the two interested parties and to be in a position to announce details of our preferred partner by 29 April 2011. At this point in time, we are able to report that the due diligence process is still ongoing with both interested parties and that we will provide a further update once this process has been completed.

I'm thinking Christmas........

[invessi]

At this point in time, I am pleased to say that I only hold shares!

[Tony Two Gloves]

Oh I see Invessi, promote people to roll over as it was good for the Company and hopefully increase the SP for your benefit. How do you sleep at night with all those poor bond holders getting that measly intereset rate when the SP is heading to 0.20 in your opinion !! As i have said all along the right choice was to convert to shares.....

[Enumerate]

Has anyone done a comparison of the capital structure and performance of NZF to BSH?

I have had a preliminary look - I think recovery prospects for cashflow and profitability are greater in NZF, if they can sort their liquidity issues with the retail debentures. They have a distribution network, management team and information technology all in place. Once the property market starts to tick up ... NZF should show a nice response in terms of profitability.

On the other hand, it would appear as if George Kerr has significant scope to tighten up a very lazy balance sheet. If Heartland can get a good management team together ... prospects here look good into the long term.

Preliminary conclusion: invest in NZF for recovery; invest in HNZ for growth.

Generally, I am keen to position my investments for a recovery in property sector. I think that the commercial property trusts will lag the "consumer" end of the property market - hence interest in positioning with financial services firms with a retail exposure. Now don't be shy ... let me know what you think of this approach!

[invessi]

TTG, not the case, I wanted to open up matters for discussion and my position at that time was to roll but Enumerate and others persuaded me with some of their comments and in particular, very good analysis to change my mind, nothing wrong with that methinks!


Oh I see Invessi, promote people to roll over as it was good for the Company and hopefully increase the SP for your benefit. How do you sleep at night with all those poor bond holders getting that measly intereset rate when the SP is heading to 0.20 in your opinion !! As i have said all along the right choice was to convert to shares.....

[Tony Two Gloves]

Well it is a total about turn on your previous comments but glad you didn't let your pride get in the way and make the wrong call. I would hate to be locked into those notes and if you try to get out now it would be disastrous. At the end of the day we all want the SP to recover but I can't see it in the short term. I unlike others don't believe they have an overly strong management team, a funding solution or a clear path forward. The only good thing is if they can convince someone to partner with them but I have to ask what do they really bring to the table? They will sorely miss John Callaghan and Peter Huljich who were the two with the drive and the vision, the rest of the team look a little old and a little tired to ramp this thing up and drive profitability. I for one are hopeful thay can convince someone who brings these missing factors to the table but I certainly are not holding my breath...

See the SP is back tracking with last at 0.027.

[Enumerate]

See the SP is back tracking with last at 0.027.

No, a block special crossing at VWAP ...

[Tony Two Gloves]

Excuse my ignorance Enumerate, but what is this adzactly?

[Enumerate]

Section 13.3.3 of the NZX Participant Rules.

Basically, if I am acting for the buyer and the seller and the consideration is below a defined amount they can negotiate the transfer price to be whatever they like.

[POSSUM THE CAT]

Anybody know who bought Huljich's shares

[Tony Two Gloves]

He hasn't sold them?

[Enumerate]

He hasn't sold them?


!

That's what I thought - are you saying the recent 600k transfer is a Huljich sale?

[POSSUM THE CAT]

http://file.nzx.com/000/383/4849383.pdf Well Tony Two Gloves what does this refer to then please

[Enumerate]

http://file.nzx.com/000/383/4849383.pdf Well Tony Two Gloves what does this refer to then please

We talked about this a while back ...



I am not sure Peter is selling any shares - the notices are an artefact of the conversion of $2m of notes thus altering the relative % holdings. Peter going from 4% to 0.92% is an artefact of his apparent transfer from a personal holding to Best Investments back in 2008.

[POSSUM THE CAT]

Enumerate As there is both a reduction in number of shares & percentage of holdings, Also a comparable reduction of interests in other holdings. For Huljich & Best Investments where did they all go.

[Tony Two Gloves]

I don't think he has sold any shares, a bit of shuffling and obviously some dilution with the conversion. According to all other sources this is correct.

I suppose as he is no longer a director he should be able to sell if he wishes without to much drama - just needs a willing buyer !

[Enumerate]

Enumerate As there is both a reduction in number of shares & percentage of holdings, Also a comparable reduction of interests in other holdings. For Huljich & Best Investments where did they all go.

I tried reconstructing the transactions through reports at the companies office. Basically, the personal 4.x% to 0.98% (from memory) is an artifact of the reporting process and does not reflect a recent sell down and then dilution. Effectively, a bunch of personal shares went in to Best (as far as I can tell) and then the recent dilution caused the latest percentage drop. Please note that this reconstruction of the transactions is indirect - there is a chance I could be wrong about this. However, the conclusion I arrived at was that PH did not sell down any significant holding.

[invessi]

The Directors of NZF Group Limited (NZF) today confirmed that the credit
rating assigned to its wholly owned subsidiary NZF Money Limited (NZFM) had
been lowered one notch to "CCC-" by International Credit Rating Agency
Standard & Poor's (S&P).

Chief Executive Officer, Mark Thornton said that the rating by S&P had not
come entirely unexpected given S&P's focus on anticipated loan repayments.
Whilst some delays had been encountered, NZFM has continued to work with all
of its borrowers to ensure settlement of several unconditional agreements is
achieved within a timeframe acceptable to NZFM. The rating also does not
reflect the due diligence process that is ongoing between NZF and two
potential new business partners and the positive impacts that a su
ccessful
deal would have on NZFM's business.

[invessi]

AND (What do you think Emumerate, these comments by De Lange won't reflect the as now position of the company in that his report relates to the position that the company was in some months go, they may well have settled some more past due loans, the comment about NZF putting cash in is very historic!)

NZF's position delicately placed: S&P
Standard & Poor's has cut NZF Money's credit rating to “CCC-” with a negative outlook, saying its liquidity position “remains delicately placed.”
Tuesday, May 10th 2011, 6:49AM
Early in March, S&P cut NZF's rating to "CCC,"citing its weakened liquidity position and questioning its ongoing viability.

S&P says it now expects the cash position of NZF, which is owned by the listed NZF Group, to be volatile and to "drop to very low levels through calendar 2011, absent a further cash injection into the business."

At the end of April, NZF missed yet another self-imposed deadline for announcing a deal with much-needed equity partners.

"Of greatest concern is that failure to progress the repayment of past-due loans could result in NZF running short of cash in calendar 2011, particularly if debenture-reinvestment experience is weak," says S&P credit analyst Nico De Lange.

"NZF's on-balance sheet cash position has improved recently as a result of some successful loan repayments (net of a secured loan repaid to one of its directors) and a cash injection from NZF Group," De Lange says.

"However, anticipated loan repayments continue to be delayed and scheduled debenture maturities through calendar 2011 remain material when assessed against projected cash levels, in our view."

NZF's last statement at the end of April said two parties interested in providing equity were still completing due diligence. NZF has been seeking new equity since early last year.

NZF, which reported a $1.4 million net loss for the six months ended September, is required by NZX listing rules to report its full-year results by May 30.

[Xerof]

the figures S and P will be seeing will be VERY current - by the time companies get into this rating category, they are reporting cashflow weekly, and most likely daily to their Trustee

Secondly, the worst thing a Company can do is miss self-imposed deadlines - credibility is vital for confidence - confidence is vital for debenture retention rates. You would think by now that new debenture money for NZF has completely dried up

this is already on the slippery slope, lets see what S and P report in a months time.......

time is running out for good news

[Enumerate]

I think the credit rating agencies are very risk adverse, following their "asleep that the wheel" behaviour from about 2006 to 2009. Only when the depth of the financial crisis was apparent did they tighten up standards.

Having said this, I welcome an accurate assessment of the risks. NZF Money, one of the divisions of the NZF Group probably warrants the CCC- rating.

The purpose of finding the financial partner is to wean NZF Money off retail debenture funding. The purpose of downsizing the NZF Money loan book is to wean NZF Money off retail debenture funding. The purpose of disposing of Finance Direct was to take pressure off the NZF Money dependence on retail debenture funding. I sense a pattern developing ....

If NZF were in denial of the problem, I would be deeply concerned. They are clearly addressing the matter and apparently have a number of "irons in the fire".

The delays to announcing the new partner amounts to bad news, in strategic terms. They keep saying that there are two parties still involved ... this has got to buy some confidence that a deal will happen.

If they have to tap the shareholders for extra equity ... this is probably the "last resort", but it remains as a viable option.

[Tony Two Gloves]

I agree with Xerof the info will be at a minimum weekly and everyone will be keeping a very close watch on NZF with good reason.

Having a little knowledge of one of the parties involved..... NZF are in an extremely poor position and will pretty much have to accept a deal on whatever terms either of the two suitors will offer if in deed they do offer a deal. The vultures are circling and the deal isn't going to be good news IMHO for anybody except either of the two parties. Did NZF really believe they were in a good position to negotiate? They really should have identified the need to change about three years ago, as Enumerate eludes to Debenture Funding is deceased for small finance companies, even more so if you are rated -CCC. Their attempt to hold on whilst admiral has been fool hardy.

[invessi]

TTG, someone on this blog speculated awhile back as to why NZF Home loans are not lending currently, my understanding under the new regulations for securitised lending is that there has to be "over-collateralisation" (see below), I am advised that this requires the lender to put in about 5% of their own cash for each loan, that will be why they are not lending and require a new financial partner who wants to get into the securitisation market, NZ is ripe for that right now so I believe it will be a win win for the partners!

"- Provision of credit enhancement

To make the securities issued by the special purpose vehicle attractive to investors and to enable funding to be obtained at favourable interest rates, it is necessary to ensure that there is little risk of investors losing money. Usually this is achieved by provision of one or more credit enhancements. A credit enhancement is simply an arrangement which provides protection against credit risk (ie the risk that borrowers will not repay the funds borrowed). Normally credit enhancements will cover losses up to a level which is several times the level recorded historically, so that the likelihood of any loss for investors is very low. Commonly used credit enhancements include the following:

third party insurance;
over-collateralisation - this occurs when the face value of the loans held by the special purpose vehicle exceeds the value of the securities it has issued;
issuing subordinated securities - holders of the subordinated securities take most or all of the credit risk on the loans because they receive payment only after other security holders have been paid;
a guarantee from a third party;
the bank being obliged to take back non-performing loans;
a one-off gift to the special purpose vehicle to provide a buffer against which losses can be written off."

[invessi]

Xerof, not sure where you get your information from, S&P ratings on finance companies run in cycles, they admit this themselves, "In reality, it takes some time to complete the analysis of new developments, so rating adjustments may not follow
instantaneously after a change in underlying creditworthiness".

B) Time and Standard & Poor's rating system
32. Standard & Poor's strives to make ratings timely. That means that at any point in time, we want our rating to reflect
a current view—including the impact of relevant forecasts and projections—about the creditworthiness of the
subject issuer (or issue). Thus, if an issuer's creditworthiness changes (either in the sense of its current situation or in
the sense of its future prospects), we want our rating to adjust quickly to reflect the full magnitude of that change. In
reality, it takes some time to complete the analysis of new developments, so rating adjustments may not follow
instantaneously after a change in underlying creditworthiness. However, when the rating adjustment occurs,
Standard & Poor's intends for it to reflect our current opinion of the full underlying change in creditworthiness.
Thus, Standard & Poor's intends for the behavior of a rating over time to closely mirror the behavior of its subject
credit.


the figures S and P will be seeing will be VERY current - by the time companies get into this rating category, they are reporting cashflow weekly, and most likely daily to their Trustee

Secondly, the worst thing a Company can do is miss self-imposed deadlines - credibility is vital for confidence - confidence is vital for debenture retention rates. You would think by now that new debenture money for NZF has completely dried up

this is already on the slippery slope, lets see what S and P report in a months time.......

time is running out for good news

B) Time and Standard & Poor's rating system
32. Standard & Poor's strives to make ratings timely. That means that at any point in time, we want our rating to reflect
a current view—including the impact of relevant forecasts and projections—about the creditworthiness of the
subject issuer (or issue). Thus, if an issuer's creditworthiness changes (either in the sense of its current situation or in
the sense of its future prospects), we want our rating to adjust quickly to reflect the full magnitude of that change. In
reality, it takes some time to complete the analysis of new developments, so rating adjustments may not follow
instantaneously after a change in underlying creditworthiness. However, when the rating adjustment occurs,
Standard & Poor's intends for it to reflect our current opinion of the full underlying change in creditworthiness.
Thus, Standard & Poor's intends for the behavior of a rating over time to closely mirror the behavior of its subject
credit.
1. Credit stability versus rating stability
33. Some market participants argue that stability of ratings is desirable and, therefore, that when a credit suffers severe

[Enumerate]

The fact of the matter is that there is good business to be written, and the distinct probability that it will get better. NZF Money is geared up and ready to go. If a partner chooses to use the rating downgrade to apply pressure to do a better deal ... scrape 'em off ... they have revealed their true colours and a long term deal, with them, is not possible.

NZF Group could probably do what the banks do and get funding by reactivating a version of the carry trade. Thinking outside the box, lets say you used an offshore bank and packaged up AAA insured RMBG securities, denominated in NZ$ ... this would be a goer.

Internationally, the dark days of the liquidity squeeze are gone. If some pathetic turkeys in NZ think they can get leverage ... scrape 'em off. Worst case, go to the shareholders ... I'd do my bit.

(I wonder if S&P know they are going to lose the rating contract once NZF shut down the retail debenture funding and they are simply taking a worst case view to minimise their assessment risk?)

[invessi]

S&P advised them months ago that another downgrade was eminate, like I say, they look at historic information and make forecasts!

[Xerof]

I cannot speak for NZF's particular situation, but I stick by my comments on S&P process.

Interesting to see S&P are also seeking some comfort going forward on 're-establishing business viability'

I guess that means they don't currently consider their business model to be viable?

I see the first bond trade has gone through on the darkside, and s/p has lost ground today

1 in 2 - lay your bets people

Also a bit surprised to see they haven't pulled the Prospectus for updating - where is the Trustee - asleep at the wheel again?

[Tony Two Gloves]

You are correct on the S&P process their info would have been at 30/04/11 - they did hint to further downgrades and they were correct to do so. They make a comment regarding viability and again they are correct to do so. In their current format NZF is not a viable business, they simply can't lend as they do not have available cash and they will not have through the remainder of 2011 as per S&P. I don't think S&P would be concerned at all about losing NZF as a client, as would their Auditors or Trustee. I seriously cannot believe the optimism around NZF that some of the people on here have. This company is hanging on by a slender thread, Shares trading at 0.023 today, the bond value has been decimated and all the promises made by themselves (which they did not have to make) have yet to be deivered and in my opinion won't be. The fat lady is warming her tonsils up and just about to break into song.....

[Xerof]

Whooh, taken both gloves off there Tony, ready for a fist fight?

Can anyone answer my question posted some time ago now - when does the Westpac facility expire? I guess I'll find out when they announce their results at end of the month

[Enumerate]

18th of October 2011 is when the warehouse facility with Westpac expires.

Just remember that NZF Money (which is the unit subject to the S&P rating review) was at about $32m of debentures in September 2010. With the sale of the Finance Direct unit - this should now be down to about $30m. Total assets, in NZF Money are about $43.5m. So, equity does not seem to be an issue - just as they have been saying it is the maturity profile of the retail debentures.

The biggest and most profitable unit of the NZF Group is the Home Loans Division (they did the $100m RMBS issue and are the unit funded by the Westpac facility). This unit has assets of $208m.

There are problems to sort ... but I think it sounds worse than it is ... these guys have time, ideas and altitude (as the airline pilots say) and seem to be working on the problem.

I bought some more at 2.3cents!!

[minimoke]

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 just the same as we saw with ALF and SCF - don't we learn?
You've got to admire the positive approach of some investors. Thankfully their enthusiasm keeps the liquidity in the market. ALF now down to $0.01 and NZF down to $0.023. Theres lessons on how Directors can destroy shareholder wealth - lessons that ought to be learnt before investment decisions made.

[Enumerate]

Have you actually done any analysis on NZF Group, Mini?

This is a situation in which this stock, in two years time, will either be worth 10x the current price; or it will be worth nothing. This is why I am unconcerned by market liquidity.

Clearly, investing into this kind of situation is not for every investor. If they do not sort their issues with retail debenture funding - bad things will happen. There are even other failure modes based on the future of the residential property market. However, if you can calculate the balance of probability ... that is why I am in NZF.

ALF did not meet my reward criteria. I hope for all concerned that it pulls through ... but it is not part of my story.

[Enumerate]

Sorry, correction to the post #391. Just remembered the latest figures we had on NZF Money were from the updated prospectus at the Companies Office:



As of mid-March NZF Money had $21m of secured retail debenture funding and $13m of equity funding!


So we are talking $21m rather than the $32m figure quoted in the half year accounts.

[Tony Two Gloves]

He-he just call it as I see it Xerof, there is some very optimistic people and comments on here, when the facts dictate otherwise. Invessi seems to think this company can do no wrong, when in reality they have made mistake after mistake and now find themselves in a very vunerable position of having to a deal with someone if they wish to remain in business. I cannot see shareholders wanting to tip more money into this in a capital raising when a third of their shareholders didn't really want shares anyway and I believe they would be reluctant to throw good money after bad. Another comment was "NZF Money is ready to go", come on.... they have no money to lend and debenture holders are not renewing, S&P state they will be very tight cash wise for 2011 and in reality NZF Money has not been lending for some time. Anyway we will all know a bit more by the end of the month when the accounts are due (unless they miss another deadline)and we can assess the cash position and another chunky loss no doubt. Best buyer at 0.01 at present, I suspect it will be muted until the accounts are released and then I suspect he will disappear to....

[minimoke]

Have you actually done any analysis on NZF Group, Mini?


Yes i have. And part of my analysis looks for flags of warning. Yellow flags moving in a breeze I cope with. Red flags blowing in a gale usually causes me to back off but not all the time. I generally won't come back in with the detailed analysis until the flags stop waving.

Some are happy to invest in a gale and good luck to them. I prefer a return relative to the risk and some times it just ain't worth heading out into a storm.

[Enumerate]

Banks desperate to lend:

http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=10724593

Syndicated from interest.co.nz - I don't know why the Herald does that - I'd rather read it from a proper Herald journo - but the message is banks are looking for new lending opportunities.

I think Westpac, in particular, looks to be wanting to increase the book (this is support by other independent reports). Gotta be good for the likes of NZF Group.

[invessi]

Enumerate, most of the banks are starting to look for new business and One Path are expected to launch a home loans division shortly and go head to head with Sovereign. With low interest rates, we should see the market start to pick up! Are you aware that most of the main banks and Sovereign are doing 95% lending to first home buyers that qualify (NZF was also until they suspended home loan lending)

[Enumerate]

Mike Pero to promote Fisher Funds - the more things change, the more they stay the same:

http://tvnz.co.nz/business-news/mortgage-firm-push-kiwisaver-4168903

[Enumerate]

$1 billion of NZ mortgages sold

http://www.stuff.co.nz/business/money/5055351/1-billion-of-NZ-mortgages-sold

[minimoke]

$1 billion of NZ mortgages sold

http://www.stuff.co.nz/business/money/5055351/1-billion-of-NZ-mortgages-sold
Are you suggesting NZF was the seller?

[Enumerate]

No, this story may be of interest because it demonstrates:

1) There is a market for RMBS; and
2) GE Money is no longer a domestic competitor

If NZF do announce a solution to the NZF Money retail debenture funding issues, through the new partnership; there does a appear to be a market in packaged mortgages.

[invessi]

3 ¢
(nzd) 0.7 30.4%

27/05 10:31 nzt

3 2.4 5 3 3 3 10,095 $303

[minimoke]

3 ¢
(nzd) 0.7 30.4%

27/05 10:31 nzt

3 2.4 5 3 3 3 10,095 $303
Yup, a $303 trade. Peoeppl don't like bernard Whimps approach to trading shares. But a 30% movement off the back of a $300 trade is hardly kosher.

[Enumerate]

NZF Final Year Result to March 2011

http://www.nzx.com/markets/NZSX/NZF/announcements/5078093/NZF-Group-Limited-NZF-Audited-Annual-Result-2011

Declared loss of $4.767 million - suppose this is in line with the NZF Money impairments (signalled to be about $4m) and the Finance Direct loss on sale (revealed as about $1m).

Haven't reviewed the numbers, yet ...

[invessi]

Oh, so they are lending then!

NZF limiting new loans to $750,000

NZF Group is limiting new loans made by its troubled property finance group to a maximum $750,000,
Friday, June 3rd 2011, 7:29AM
by Jenny Ruth

"This should ensure that significant loan impairment allowance movements and bad debt costs are restricted in future and ultimately result in NZF's property finance division returning to profitability," says chief executive Mark Thornton.

The division's $5.1 million in loan impairment and bad debt costs resulted in NZF Group reporting a $4.8 million net loss for the year ended March.

"NZF's experienced lending team continues to work with all of its borrowers to achieve recovery of all outstanding loans. Whilst there are still a couple of large property finance exposures that remain within NZF's loan portfolio, we believe that we have been prudent with our loan impairment allowance calculations," Thornton says.

NZF's home loans division's pre-tax profit fell 39.4% to $2.5 million in the year and Thornton says that was mainly due to changes in the Reserve Bank's official cash rate impacting the value of interest rate swap contracts and higher funding costs of its $100 million in securitised mortgages than the Westpac warehouse facility. The $84.6 million in secured notes on NZF's balance sheet relate to that securitisation last year which was the first in New Zealand since late 2007.

NZF's financial services distribution operations, which include 50% of the Mike Pero Mortgages broking business, saw pre-tax profit before last year's goodwill write-down fall to $187,000 from $421,000.

Thornton says the main factors include the slow housing market and mortgage lending in generally, a reduction in income generated from the Huljich wealth management Kiwisaver scheme and set-up costs connected with Mike Pero Real Estate which will start to generate income in 2012.

Thornton didn't answer a question on whether NZF is making progress on its efforts to bring in new equity.

[Tony Two Gloves]

Bit hard to lend to much when you only have $5M in cash according to the accounts, still no update on potential partner no surprise there! I could have answered the question for Me Thornton - there is no partner willing to do a deal with us where we are not getting completely scewed over.....

Pretty poor result on the back of last years poor result, Pero's only marginally profitable, huge w/off for Finance Direct and confessions of other large property finance exposures. They need to recognise the mistakes made by their "experienced lending team". Equity won't last much longer at these loss rates.

[invessi]

TTG, hopefully this will put a smile on your face!!

NZF
03/06/2011 13:37
GENERAL

REL: 1337 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) - Continuous Disclosure

The Directors of NZF Group Limited are pleased to announce that the due
diligence process with potential business partners has reached a stage where
we are now confident of a successful outcome. As a consequence, the Home
Loans Division will resume origination activities under its committed Westpac
Warehouse Facility. Origination activities were suspended earlier this year
when negotiations with new business partners commenced. Westpac has been
privy to these negotiations and have agreed to renew the current Warehouse
Facility of $225 million until 18 October 2012 on similar terms and
conditions.

ENDS
End CA:00209873 For:NZF Type:GENERAL Time:2011-06-03 13:37:51

[Tony Two Gloves]

Yes I get the Direct Broking emails to....

I still think they will get srewed over in light of their financial performance over the last few years and all the others issues around S&P. The devil will be in the detail.....

[Newman]

NZF promised to donate 0.25% of the deposits received by May 31 to Red Cross to help Christchurch rebuilding. It has not revealed the amount of donation. Does it suggest little new deposits thus little money to donate?

Would new shares be issued to the new business partner(s) at current share price 2-3 cents? If so, those who converted notes to shares would be a losser.

[Greentea]

Interesting, since the good news where has all the gossip gone?

[Enumerate]

Interesting, since the good news where has all the gossip gone?

We know that:

1) The long term lending part of the business will be partially sold down to the new partner who will take a majority stake.

2) The identity of the new partner is unknown - the contenders are: Liberty Financial, Resimac, Members Equity Bank, Firstmac and AMP Bank. Resimac is my pick based on NZ Herald reporting. (Liberty is an existing partner in the Pero unit; Resimac has an interest in Allied Farmers).

3) There are extreme growth prospects in the non-bank residential mortgage market. Total market in NZ is about $171b with about $4b in non-bank entities. NZF currently only has about 4% of this non-bank portion of the market.

4) Competition in the mortgage market is vital, once the OCR starts to rise. The Australian government clearly understands the need to support non-bank entities:

http://www.theaustralian.com.au/business/opinion/competition-returning-to-mortgage-market/story-e6frg9if-1225828937193



To its credit, the government understands the need for a healthy mortgage market and is providing small lenders with a helping hand, through its promise of a $16 billion investment in residential mortgage-backed securities by the Australian Office of Financial Management.

Benefits to NZF:

A) The Aussies clearly see vast growth prospects in long term mortgage lending, in the non-bank sector, in NZ. I agree with them ... there are SPECTACULAR growth prospects

B) Equity released from the NZF long lending unit will allow the short lending unit to be refloated. There are SPECTACULAR growth prospects in returning to this market

C) The Pero financial services distribution and real estate initiatives will be very valuable drivers of this SPECTACULAR lending growth

NZF market capitalisation is at about $3.5m. The current financial year should be the "bounce back". I expect we will gain a clear picture of the growth prospects by year end - given the collapsed state of competitors and the importance of giving the banks a competitive run - I am now expecting this growth rate to be SPECTACULAR.

[Alan3285]

... SPECTACULAR ...

I'm glad you didn't go so far as to say that the prospects were 'most spectacular', else I might have had to comment on your use of excessive superlatives.

:D

Alan.

[invessi]

Lets not be picky Alan, the company has at least turned the corner for the better and if the new partner is Resmac, I think we will see something spectacular.

http://www.resimac.com.au/


I'm glad you didn't go so far as to say that the prospects were 'most spectacular', else I might have had to comment on your use of excessive superlatives.

:D

Alan.

[Tony Two Gloves]

The only "Spectacular" thing I have seen so far is a Spectular tumble of the share price and share holder value....

I don't share your optimism Enumerate, their lending team has made some big mistakes which they will remain paying for some time and there is more to come out of the wood work. It will be interesting to see how S&P intepret this move with Resi. Also I think the Pero unit is in a bit of a mess and only barely profitable, only time will tell if the Real Estate venture will make any difference I certainly wouldn't think so in the short term. All the hype seems to have died down with this venture, the only thing they would have seen so far is marketing expeses and no income - not surprising as this was terribly timed in my opinion.

[winner69]

Weren't Resimac the guys who came to the aid of Allied Finance ..... with an intent to invest which kept the bankers et all off Allied backs for a few months ..... and conveniently allow the Hangover thing to go through .......... until the 'intent' was found only to be that .... and the 'investment' never went ahead .... I think thats how it all worked out

Many said it was a deal that was never going to happen (consumated) but it sounded good at the time

[Enumerate]

I can't understand why they were interested in Allied - it was very far from their core lending profile. Maybe they were searching for a vehicle to do non-bank mortgage lending, in NZ?

[Enumerate]

I don't share your optimism Enumerate ...

Investment is all about the future ... dwelling on the past is useful, to a degree; but what really matters is the market and the ability of a company to respond to the market.

I think market prospects are ... SPECTACULAR and given NZF Group has done very well to survive when retail debenture liquidity has evaporated I think there is cause for some optimism that the NZF Group response to the market will be SPECTACULAR.

This recovery is not going to take weeks. We do not even have ink on the partnership deal, yet. Give it a year to gauge progress and expect significant results in about two years. Hopefully we will have a long period of economic growth ahead of us.

[Enumerate]

2011 Annual Report to March is out:

http://www.nzx.com/markets/NZSX/NZF/announcements/5213744/NZF-Group-Limited-NZF-2011-Annual-Report

[minimoke]

Have you actually done any analysis on NZF Group, Mini?

This is a situation in which this stock, in two years time, will either be worth 10x the current price; or it will be worth nothing. This is why I am unconcerned by market liquidity.

Clearly, investing into this kind of situation is not for every investor. If they do not sort their issues with retail debenture funding - bad things will happen. There are even other failure modes based on the future of the residential property market. However, if you can calculate the balance of probability ... that is why I am in NZF.

ALF did not meet my reward criteria. I hope for all concerned that it pulls through ... but it is not part of my story.
Any concerns about NZF Money Limited withdrawing its 2010 prospectus and ceasing the issue of new secured deposits?

[Tony Two Gloves]

There should be! Their loan book is becoming an issue as S&P well know, the optimism in this company was poorly formed and their cash has almost gone. I would certainly be concerned if I had funds due shortly.......

[minimoke]

From Invessi on 3 June


The Directors of NZF Group Limited are pleased to announce that the due diligence process with potential business partners has reached a stage where we are now confident of a successful outcome. .............

And still we wait.

[Tony Two Gloves]

The news today won't help get the deal over the line, pulling the Prospectus is the worst look possible IMHO.

[minimoke]

Now they tell us they voluntarily withdrew the prospectus on Monday 18 July. Hmm - no market disclosure on that trivial development. So what was in those discussions with the FMA?

[Tony Two Gloves]

Further good news.....NOT. The death spiral is back!!

NZF
22/07/2011 09:28
CREDIT

REL: 0928 HRS NZF Group Limited

CREDIT: NZF: NZF Group Limited (NZF) - Continuous Disclosure

Further to our market announcements made earlier today, NZF advises that the
long-term issuer credit rating assigned to its wholly owned subsidiary
company, NZF Money Limited (NZFML), has been lowered one notch from"CCC-" to
"CC" by International Credit Rating Agency Standard & Poor's(S&P).

A copy of S&P's Research Update is attached to this Market Announcement,
which indicates that S&P will lower the issuer credit ratings assigned to
NZFML to "D" if the company fails to meet any of its creditorobligations
next week.

[Xerof]

If Directors don't move, I'm sure the Trustee will - dark thoughts prevailing .......

[Tony Two Gloves]

Looks like they are disclosing as they go, apart from the time lag on the Prospectus withdrawal - obviously tyring to avoid community service or worse in the future....

[minimoke]

I bought some more at 2.3cents!!
Hindsight might show yesterdays 1.5 cent bid was a good exit for you. That bid has gone now with no other buys in the wings. No doubt there will be some spectacular revelations yet to come.

[Tony Two Gloves]

Hey Mini is it just me and you in here, all the positive (blinded / stupid) people seem to have disappeared..... After reading numerous articles it looks like the FMA made them withdraw the Prospectus over poor disclosure of assset quality and liquidity issues, not all this BS that NZF voluntarily withdrew because of a defaulting borrower. In my opinion they have been holding on by a thread for well over a year and all the nay sayers that S&P were over reacting were wrong - they weren't and next week they will more than likely default and be given a "D".
I have never been able to understand the positivity some people have had for NZF, you canot keep losing 4 - 5 mil a year and keep harping on about your experienced lending team, Pero's is making no money and in reality is another broken model just like their consumer finance arm which they took a bath on. They do not have a viable business. The final straw for me was when Huljich resigned from the board, that was the day that the last remnants of hope disappeared!

[minimoke]

Hindsight might show yesterdays 1.5 cent bid was a good exit for you. That bid has gone now with no other buys in the wings. No doubt there will be some spectacular revelations yet to come.
Enumerate - is thsi spectacular enough for you?

NZF
22/07/2011 13:13
GENERAL

REL: 1313 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) - Continuous Disclosure

NZF today advises that the Board of its subsidiary company, NZF Money Limited (NZFML), have explored various options for a short-term funding solution.
After giving the matter considerable thought and taking into consideration developments over the last couple of days, the Board of NZFML do not believe
that such a short-term solution is in the best interests of NZFML or its investors.

Accordingly, the Board of NZFML have requested NZFML's Trustee, Covenant Trustee Company Limited, to appoint a receiver. Further announcements will
be made in due course.

[Tony Two Gloves]

And that would appear to be that, took a long time but looks like our opinions were vindicated - or does Invessi still see a light at the end of the tunnel??

[minimoke]

Hey Mini is it just me and you in here, all the positive (blinded / stupid) people seem to have disappeared.....

I remain saddened by the lack of insight investors show in their decision making. Often we don't need protecting from rogues in the market - we need protecting from ourselves. So often we see, not rational investment decisions but gambling. In itself I have no problem with this - people are free to loose their own money as they see fit. But I despair when it is dressed up as "investment". And what really gets to me is that we won't learn from our past mistakes. We'll continue to get taken in by those who are able to spin a semi credible yarn. I just can't figure out why people insist on throwing good money after bad when the warning signs seem so self evident to me. At least with NZF I'm not having to pick the pieces up for others like I've had to do with Hanover, ALF and SCF.

[Xerof]

Hey Mini is it just me and you in here, all the positive (blinded / stupid) people seem to have disappeared

Hey TTG, give me some credit - I've been smeared for my negativity and crystal clear insight too you know ;);)

FMA is performing well so far.....lots more ground to cover but a good start

[Tony Two Gloves]

I agree, people tend to be unable to distinguish between fact and fiction. The facts with NZF are consistent chunky losses, broken business models & liquidity issues - all these were summed up by S&P a few months back but still people kept insisting this was an over reaction and the company itself stated this. I tend to rely on the financial results which with NZF speak for themselves over the last few years and pay very little attention to the comments of directors, as they are the major shareholders of course they do want to see this thing fail. We have all seen the spectacular share price colapses and very few come back from that (exception Diligent) a $1.60 odd to 0.035 cents is a SPECTACULAR loss of value and if you purchased shares after the S&P downgrade Mini is right - there are much better odds at the casino!!

[Tony Two Gloves]

Sorry Xerof - you were on the money with that Trustee call. Again I like the way NZF said it had contacted it's Trustee....I think the Trustee (if awake) would have been pounding on NZF's door for the last few days. The NZF spin doctors could make Osama look like a well balanced chap who is mostly mis understood....

[minimoke]

.... pay very little attention to the comments of directors, as they are the major shareholders of course they do want to see this thing fail.
Of course they don't want their company to fail - but we should also look at director remuneration. Callaghan got paid around $200k, Thornton $184k and Croad $134k. Generally I don't have too much of a problem with Director remuneration - providing they are adding value to the strategic direction of their company and looking after the governance issues. So often I can't help but feel Directors are directors because of the cash flow from wages. And that's putting aside issues like related part lending

[minimoke]

...there are much better odds at the casino!!
There sure are. Looking back on this thread I'm still astounded by posts like this at #2 "I own some but admit I didn't really do my homework on them."

[Enumerate]

The fact that the new "partner" in Home Loans probably understood how critical the situation in NZF Money was and still reneged on the "done deal" is the seat of the problem.

The fact that a "partner" does this probably foreshadows further negative impacts.

[Tony Two Gloves]

What a bizarre thing to say, surely they must have received some advice / recomendation for presumably those horrible notes? I remember seeing a comment from Callaghan in one of the Sunday papers saying he couldn't understand why the notes where trading at such a discount and he would be as many as he could if he was allowed to. Well maybe the question has now been answered. I don't think Croad was ever a directof of NZF - just that brilliant investment Finance Direct.

[minimoke]

The fact that the new "partner" in Home Loans probably understood how critical the situation in NZF Money was and still reneged on the "done deal" is the seat of the problem.

The fact that a "partner" does this probably foreshadows further negative impacts.
What new partner, what doen deal.?

I read teh following

NZF
03/06/2011 13:37
GENERAL

REL: 1337 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) - Continuous Disclosure

The Directors of NZF Group Limited are pleased to announce that the due
diligence process with potential business partners has reached a stage where
we are now confident of a successful outcome. As a consequence, the Home
Loans Division will resume origination activities under its committed Westpac
Warehouse Facility. Origination activities were suspended earlier this year
when negotiations with new business partners commenced. Westpac has been
privy to these negotiations and have agreed to renew the current Warehouse
Facility of $225 million until 18 October 2012 on similar terms and
conditions.

ENDS
End CA:00209873 For:NZF Type:GENERAL Time:2011-06-03 13:37:51

and the key bits for me were "potential business partners" and "confident of a successful outcome" Have I missed the announcement of the new partner and the announcement that the outcome was actually successful?

[Steve]

I wonder what levels of guarantees etc (if any) NZF has provided to its Finance Subsidiary that may now be called up by the Receivers? Potentially, this could be the end for NZF as a whole...

[buckles]

I wonder what levels of guarantees etc (if any) NZF has provided to its Finance Subsidiary that may now be called up by the Receivers? Potentially, this could be the end for NZF as a whole...


Yes, what are the implications of this for NZF parent? I'm worried about my shares....

[minimoke]

Yes, what are the implications of this for NZF parent? I'm worried about my shares....
The prognosis is unlikely to be good. But then again it hasn't been for a very very long time. At the moment your shares are worthless as there are no "buy" bids. So its time to think about your exit strategy. Do you accept the next bid offer that is raised, no matter what loss you're going to take. Or do you reread Enumerates analysis and hold on for that spectacular change.

[invessi]

Buckles, maybe this will help to answer your question!

NZF
25/07/2011 12:21
GENERAL

REL: 1221 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) - Continuous Disclosure

Further to recent market announcements, NZF today advises that Brendon James
Gibson and Grant Robert Graham of KordaMentha, Chartered Accountants, have
been appointed jointly and severally to be receivers and managers of the
property charged under the Debenture Stock Trust Deed dated 21 October 1999
between NZF Money Limited (NZFML) and Covenant Trustee Company Limited, as
Trustee for secured debenture stockholders.

The Board, management and staff of NZFML are fully co-operating and providing
assistance to KordaMentha, Chartered Accountants, in order to enable them to
carry out their duties effectively as receivers of NZFML. Investors
requiring further information concerning the status of their investments are
directed to the KordaMentha website www.kordamentha.com, who can also be
contacted at the following address:

KordaMentha (NZ)
Level 16, Tower Centre,
45 Queen Street
Auckland 1010
New Zealand

PO Box 982
Auckland 1140
New Zealand

Tel: +64 9 307 7865
Fax: +64 9 377 7794
Email: nz@kordamentha.com

The Board of NZF is currently considering the financial impact that the
receivership of NZFML has on the operations of the NZF Group of Companies. A
further announcement will be made regarding this in due course.

In the meantime, the Board of NZF would like to reassure NZF's shareholders
and its Homeloan mortgage customers and broker channel, that the receivership
of NZFML has no direct impact on the operations of NZF's profitable Homeloans
Division.

In addition, the Board of NZF would like to reassure NZF's shareholders that
the receivership of NZFML also has no direct impact on NZF's 50% strategic
investment in MPMH Limited (Mike Pero Mortgages).

ENDS
End CA:00211611 For:NZF Type:GENERAL Time:2011-07-25 12:21:46




Yes, what are the implications of this for NZF parent? I'm worried about my shares....

[minimoke]

Buckles, maybe this will help to answer your question!



go to www.nzf.co.nz and click on the "investors" tab. It takes you to the Korda Mentha website. If that fill shareholders with confidence, good on ya!

If you read teh Annul a report ot says"On 10 June 2011, NZF Group limited entered into exclusive due diligence with an Australian private company over a staged period. It is expected that the party will support the home loan activities. the Australian partner which will have a majority stake in NZF’s home loan division and is vastly experienced in the Australian RmBS market and will add significantly to the current operations of this division." What do you reckon the chances of that deal going ahead?

[invessi]

We should know that this week, I would say that the chances of it happening are still quite good, there are advantages to both parties for this to happen and if Westpac are still supporting it, and I see no reason why not, (because NZF have proven to them that they are good operators in this space) it should be a win win for all three entities. They have been flagging for some time as have S&P that the finance company had past due and liquidity problems and I think NZF were driven to try and keep the finance company going out of a sense of public image and the interests of the company and the investors, NZF still have a fair chunk of their own equity in the finance company and it remains to be seen what they might get back. I think they have a chance to repay all investors and get cash out for themselves because it has already been flagged that they will be cooperating and working closely with the receivers, this should produce the best possible outcome and take the heat off the group!


go to www.nzf.co.nz and click on the "investors" tab. It takes you to the Korda Mentha website. If that fill shareholders with confidence, good on ya!

If you read teh Annul a report ot says"On 10 June 2011, NZF Group limited entered into exclusive due diligence with an Australian private company over a staged period. It is expected that the party will support the home loan activities. the Australian partner which will have a majority stake in NZF’s home loan division and is vastly experienced in the Australian RmBS market and will add significantly to the current operations of this division." What do you reckon the chances of that deal going ahead?

[invessi]

Minimoke, notice issued yesterday by NZF to originators, hope it makes you and TTG feel a bit better!

By now many of you would have caught up with our recent news and market announcements that NZF Money Limited has gone into receivership.

Your clients Home Loan is with NZF Mortgages Limited and the service provider being NZF HomeLoans Limited. This part of the business is as they say “Business as Usual”.
Our home loans lending operations and funding facilities with Westpac Institutional Banking all remain in place and are unaffected by this development.

Further to our NZX market announcement of 10 June 2011, we continue to work with an Australian private company and remain confident that we can form a joint venture focused on Home Loan activities in the near future. As apart of this process, discussion has already begun around the introduction of a new brand name which will be announced in due course.

In the meantime, I have attached a copy of a letter that we will be forwarding to your clients.

So for now – It’s Business as Usual.




go to www.nzf.co.nz and click on the "investors" tab. It takes you to the Korda Mentha website. If that fill shareholders with confidence, good on ya!

If you read teh Annul a report ot says"On 10 June 2011, NZF Group limited entered into exclusive due diligence with an Australian private company over a staged period. It is expected that the party will support the home loan activities. the Australian partner which will have a majority stake in NZF’s home loan division and is vastly experienced in the Australian RmBS market and will add significantly to the current operations of this division." What do you reckon the chances of that deal going ahead?

[minimoke]

Minimoke, notice issued yesterday by NZF to originators, hope it makes you and TTG feel a bit better!

The words that don't fill me with confidence are "remain confident". How many times have investors hears those platitudes from their companies only to be left high and dry. I much prefer words of completed action like "we have agreed...."

[invessi]

The words that don't fill me with confidence are "remain confident". How many times have investors hears those platitudes from their companies only to be left high and dry. I much prefer words of completed action like "we have agreed...."

Minimoke, (and TTG) don't you think a bit of good faith is in order.......

NZF home loan deal still on: Thornton

NZF Group's deal with the unnamed Australian private company which is expected to take a majority stake in NZF's home loans division should still proceed despite the group's subsidiary NZF Money going into receivership last week, says chief executive Mark Thornton.
Tuesday, July 26th 2011, 3:00PM
by Jenny Ruth

"As late as today (Tuesday), we have confirmation that the proposed transaction with the Australian investor should take place as that business is not linked to NZF Money," Thornton says.

"The receivership does not have any effect on the rest of the group apart from some brand damage I suspect," he says.

NZF continues to own its home loans division and 50% of the Mike Pero Mortgages franchise group, both of which are profitable.

Managing NZF Money "has been a very big challenge since the massive run off in debentures leading up to the expiry of the government guarantee last October," Thornton says.

Since then, the company had been very reliant on loan repayments to meet maturing debentures "which, of course, were not assisted by negative downgrades from S&P (international ratings agency Standard & Poor's)."

S&P rightly pointed to NZF Money's low reinvestment rates but that “to a degree became self fulfilling,” he says.

Heading into receivership, NZF Money owed debenture holders about $18 million. That's a long way from the $63.8 million it owed debenture holders at March 31, 2010.

The finance company's last prospectus update on June 30 also showed it still had equity of $10 million, although past due loans were $19 million.

Thornton says it's too early to comment on the likely return to debenture holders but that the $19 million in loans were deliberately allowed to become past due so NZF Money could be in a position to force repayment.

[minimoke]

Minimoke, (and TTG) don't you think a bit of good faith is in order.......


Frankly, No. I saw so much money poured into Hanover / ALF on blind faith and SCF on good faith that there is no room for faith in my investment portfolio. Jeez - you'll be having the boys at NZF doing financial programmes on the radio on Sunday mornings next!

[QOH]

Does anyone see the noteholders getting anything back?

[invessi]

Does anyone see the noteholders getting anything back?

I would think so, NZF are prudent lenders and I would expect they will recover most of their past due loans over time, if the relationship with the receivers remains friendly and the receiver see's value in having NXF handle the loans recovery, that will also help matters and don't forget that NZF have $10m of their own equity in NZFM. I recall that when Cleggs Finance went into receivership, Brian Clegg was retained by the reciever to recover loans and this produced a good result for the debenture holders.

[Tony Two Gloves]

Time to give those rose tinted glasses of yours a clean Invessi, how in any shape can you put a positive spin on this?

Buckles - the shares are worthless as they have been for most of this year, there is a buyer at 0.07 which looks a fair offer - who is going to go first. I can't see how Westpac will continue to support NZF after this fiasco. NZF keep going on about their lending team, what a joke they were doing deals nobody else would touch because of the juicy fee's - what a mistake. They now say we let the loans go into arrears..... were they telling customers not to pay? What a load of garbage, everyone needs to stop listening to NZF press releases and work off the facts provided by S&P and their annual report. As to the value of the Pero brand, $5 million - give me a break, this unit wasn't even profitable after fleecing all those poor franchisee's a value of $5 million is beyond absurd.

[QOH]

I would think so, NZF are prudent lenders and I would expect they will recover most of their past due loans over time, if the relationship with the receivers remains friendly and the receiver see's value in having NXF handle the loans recovery, that will also help matters and don't forget that NZF have $10m of their own equity in NZFM. I recall that when Cleggs Finance went into receivership, Brian Clegg was retained by the reciever to recover loans and this produced a good result for the debenture holders.
Thankyou for the opinion.

[Tony Two Gloves]

QOH - I wouldn't rely to much on that advice, the only saving grace is that you will rank ahead of shareholders if the group fails. They have not been prudent lenders - how can you say that Invessi? The receivers job will be to maximise returns for the debenture holders, I would doubt they well let NZF Group handle this, I believe most of their staff have been made redundant now anyway. If they make the call to fire sale the security properties or loan book than this will get ugly and the return to debenture holders will be not be close to 100%. As for NZF's $10M of equity you must remember this was not their idea it was forced upon them by FMA & Covenant, the equity will be of no concern for the receivers. In my opinion NZF Group should give serious consideration to de listing as I can see no reason why they would continue with the compliance costs when there is vitually no benefit to them - their brand, credibility and integrity have all been destroyed!

[Tony Two Gloves]

Nasty rumour of 45 - 60 cents in the dollar floating around - anyone heard anything concrete?

[QOH]

Nasty rumour of 45 - 60 cents in the dollar floating around - anyone heard anything concrete?

I haven't even heard anything from them to say they are in receivership! I'd be elated if it was 60 cents in the dollar.

[Tony Two Gloves]

Haha I bet you would QOH. The 45 - 60 cents in the dollar would be the amount the secured debenture holders would get back for every dollar they invested in Debenture Stock with NZF Money. I think you hold the NZF Notes which are not effected by the receivership of NZF Money apart from the very bad look this has for the group. This is obviously comes through to the current pricing on the notes which is a significant discount to the $1 value they originally had.

[QOH]

Haha I bet you would QOH. The 45 - 60 cents in the dollar would be the amount the secured debenture holders would get back for every dollar they invested in Debenture Stock with NZF Money. I think you hold the NZF Notes which are not effected by the receivership of NZF Money apart from the very bad look this has for the group. This is obviously comes through to the current pricing on the notes which is a significant discount to the $1 value they originally had.
Thanks Tony, that explains why I haven't heard anything. Does that mean I might still receive interest payments, or am I being too optimistic here?

[Enumerate]

Thanks Tony, that explains why I haven't heard anything. Does that mean I might still receive interest payments, or am I being too optimistic here?

If you are a NZF020 holder - the security for your Capital Notes is held by NZF Group. This entity owns investments in NZF Homeloans, Mike Pero Holdings, NZF Money and formerly Finance Direct.

Finance Direct has been sold and NZF Money has slipped into receivership.

The largest units of the group - Homeloans and Mike Pero are still trading and should still be profitable.

We are all waiting for a status update on the selldown of a majority stake in the NZF Homeloans unit. The money released in this sale was intended to be applied to cover debenture payouts in NZF Money - the lack of completion of this sale compromised the NZF Money repayments - hence, receivership for this unit.

So, the bottom line is that interest on your NZF020 is still due and it is probable that it will be paid (due to the cashflows from Homeloans).

However, we are all expecting some further announcement on the viability of the group following the loss of the NZF Money unit.

[Enumerate]

If you want to review the various statutory reports, as they fall due, you can inspect the following link:

http://www.business.govt.nz/companies/app/ui/pages/companies/868536/documents?backurl=%2Fcompanies%2Fapp%2Fui%2Fpages% 2Fcompanies%2Fsearch%3Fmode%3Dstandard%26type%3Den tities%26q%3DNZF%2520Money

[minimoke]

So, the bottom line is that interest on your NZF020 is still due and it is probable that it will be paid (due to the cashflows from Homeloans).
Interest for NZF020's at 6% will be paid. Record date is 5 September, payment 15 September

[invessi]

NZF back in business
Friday, September 9th 2011, 6:40AM
Non-bank lender NZF Home Loans has rolled out home loan rates for new business it receives. The rates are for its varible. six month and one year terms and there are different rates for various LVR levels. It says the rates are only for new business Introduced to NZF HomeLoans, no pre approvals are accepted and the LMI is payable by the borrower where LVR is greater than 80%. The LMI can be capitalised to a maximum LVR of 95%.

[minimoke]

Minimoke, (and TTG) don't you think a bit of good faith is in order.......

NZF home loan deal still on: Thornton

NZF Group's deal with the unnamed Australian private company which is expected to take a majority stake in NZF's home loans division should still proceed despite the group's subsidiary NZF Money going into receivership last week, says chief executive Mark Thornton.
Tuesday, July 26th 2011, 3:00PM
by Jenny Ruth

"As late as today (Tuesday), we have confirmation that the proposed transaction with the Australian investor should take place as that business is not linked to NZF Money," Thornton says.

"The receivership does not have any effect on the rest of the group apart from some brand damage I suspect," he says.

NZF continues to own its home loans division and 50% of the Mike Pero Mortgages franchise group, both of which are profitable.

But what about an update on this ongoing promise?

[invessi]

But what about an update on this ongoing promise?

I understand this is still in progress1

[Tony Two Gloves]

I am sure they would want to be involved after this article - incompetence springs to mind, but this is positive right Invessi?? I think it would be safe to say NZF Groups equity in this has GOOOOONE

Debenture holders in failed lender NZF Money face a likely shortfall as the receivers expect to write down the value of loans on its books.
Receivers Grant Graham and Brendon Gibson of KordaMentha expect to make a "material" impairment to the $28.3 million loan book, which will probably lead to a shortfall for debenture holders owed some $16.4 million.
Unsecured creditors owed $115,000 will probably go away empty-handed, they said in their first report.
"We are continuing to review the loan book and have commenced the process of collection of outstanding loans," the report said.
"We note however that several loans of significant size have already been subject to previous restructuring, and in many cases valuations for security properties are well out date.
These factors, logically give rise to concerns that there will be a material level of impairment in the loan book."
NZF Money, the deposit-taking subsidiary of NZF Group, was put in receivership in July after its parent failed to secure short-term funding needed to keep the finance company afloat.

The shortfall arose after the Financial Markets Authority forced the company to pull its debenture prospectus which hoped to raise $350 million over the issues around asset quality and liquidity disclosure.
Since the receivership began, some $33,000 in employee entitlements have been paid.
The report said the company has several security interests with Motor Trade Finance Ltd., Marac Finance, Magnolia Lee Lease & Rentals, and UDC Finance.
Receivers noted that they had yet to receive a claim from the Inland Revenue Department.
In addition to its loan book, Korda Mentha said the company had an estimated $1.7 million in other assets which would be realise, consisting of inter-company loans, subordinated notes owned by NZF Mortgages, cash holdings and fixed assets.
Shares in parent company were unchanged at 3.5 cents today, and have declined 77 per cent so far this year.

[invessi]

Expect the good and the bad, not so good for debenture holders unfortunately but good for shareholders, not sure where the incompetence comment comes from.......do you think this might have been the cause of the receivership "The shortfall arose after the Financial Markets Authority forced the company to pull its debenture prospectus"!! I think you must be referring to bridgecorp and the like!

[Tony Two Gloves]

Not so good for Debenture holders? Any loss of capital is disastrous for them and they will lose some that is for sure - re read some of NZF Moneys ads over the last 12 months - were different, we have survived, our experienced lending team and prudent management - what a load of BS, their poor lending and management will cause retail investors to lose money and that is unforgivable. Not sure how you get good news for shareholders out of this, from memory didn't NZF have approx $10M of equity in NZF Money? I don't think anyone will want to partner with them now including Westpac.

The receivership isn't the fault of the FMA, they were hiding bad loans from Covenant, restructuring them and relying on outdated valuations to keep up appearances, i'm not getting mixed up with Bridgecorp just seeing a lot of simalarities. If the directors have signed off the Prospectus knowing this info then we could see further action, I believe Mr Feeley already has their email address's......

[invessi]

All conjecture on your part TTG, Westpac are in support, NZF home loans are lending as we speak and the JV is emminent!


Not so good for Debenture holders? Any loss of capital is disastrous for them and they will lose some that is for sure - re read some of NZF Moneys ads over the last 12 months - were different, we have survived, our experienced lending team and prudent management - what a load of BS, their poor lending and management will cause retail investors to lose money and that is unforgivable. Not sure how you get good news for shareholders out of this, from memory didn't NZF have approx $10M of equity in NZF Money? I don't think anyone will want to partner with them now including Westpac.

The receivership isn't the fault of the FMA, they were hiding bad loans from Covenant, restructuring them and relying on outdated valuations to keep up appearances, i'm not getting mixed up with Bridgecorp just seeing a lot of simalarities. If the directors have signed off the Prospectus knowing this info then we could see further action, I believe Mr Feeley already has their email address's......

[Tony Two Gloves]

It is not conjecture if it is backed up by the Receiver is it. Stop listening to the directors, listen to the Reciever, Standard & Poors, Covenant and their Auditors!!

Also look up emminent in the dictionary, this has been going on for ages. You have stated on several occasion they are prudent lenders, do you still stand by that?

[Xerof]

You won't find imminent under E in the dictionary.......

The share price is telling the story - believe that, not the company foghorn (invessi)

Westpac can and will stay, as long as they hold sufficient and watertight, realisable security. Watch out for the day it all goes tits up

[Tony Two Gloves]

I think that day has arrived...... Great news for shareholders indeed Invessi !!

NZF
22/09/2011 16:45
GENERAL

REL: 1645 HRS NZF Group Limited

GENERAL: NZF: NZF Group Limited (NZF) - Continuous Disclosure

NZF announced today that it has written down the carrying value of the
Group's investment in NZF Money Limited (NZFML) to $nil and has discontinued
including the results of NZFML in its consolidated financial statements with
effect from 22 July 2011, being the date that NZFML was placed into
receivership, as NZF no longer has direct control over NZFML's affairs.

This follows the receipt of legal, tax and accounting advice and the release
of the Receivers' First Report dated 21 September 2011 by KordaMentha,
Chartered Accountants, which indicated that there was unlikely to be a return
to unsecured creditors of NZFML.

The effect of the above will result in an impairment loss on investments of
$5.074 million being recognised by NZF in its individual parent company
financial statements for the year ending 31 March 2012 and a loss on
discontinued operations of $1
0..700 million being recognised by NZF in its
consolidated financial statements for the year ending 31 March 2012.

NZF would like to reiterate that the receivership of NZFML has had minimal
impact on the operation of NZF's profitable Homeloans Division and on NZF's
50% strategic investment in MPMH Limited (Mike Pero Mortgages).

A copy of the Receivers' First Report dated 21 September 2011 released by
KordaMentha, Chartered Accountants, can be viewed online at
www.companies.govt.nz (http://www.companies.govt.nz/).

ENDS
End CA:00214112 For:NZF Type:GENERAL Time:2011-09-22 16:45

[minimoke]

I think that day has arrived...... Great news for shareholders indeed Invessi !!


TTG, I fear I must take you to task. You have omitted the part about the immeninet JV agreement!

Edit: Apologies TTG - there was nothing in the anouncement about the JV. Now theres a surprise!

[Enumerate]

If you read the receiver's report - he notes 28.3M of loan receivables, 16.4M of debenture liabilities.

The loan receivables have had impairments registered against them, by NZF, over the past few years.

Other various assets more than cover other various liabilities - noting the IRD has yet to make a claim.

The Receiver notes: "At this time it is not possible to accurately forecast the level of recovery from the loan book assets". Yet has taken the liberty to note: "... it is unlikely that there will be a return to unsecured creditors".

So, it seems that the receivers are forecasting at least a 60% impairment across the loan book. Given that the vast majority of this book is 1st mortgage, with the next big tranche being 2nd mortgages - it would appear that, according to the receiver, the quality of the loan book is very poor, indeed.

However, I think I will take a different view .... rather than rush off with the "adult diaper" brigade, I think a bet AGAINST the Receiver would be how I want to place my money. I wonder if you can buy NZF Money debt at 10cents on the dollar?!?

[Xerof]

I think the impact of the accounting entries is to wipe out equity at the parent coy level...someone please correct me if i am wrong

Recoveries under first mortgage security in this environment are often coming up short so no cigars if the valuations are old and unrealistic

10 cents might get you a return, but 50 cents doesn't help the cause much - i think its gone

[Enumerate]

These Insolvency firms have been the real crooks in this GFC ... they produce these noddy reports that contain no real analysis of the situation, they paint the darkest possible view, present no facts or basic logic to justify their position; they proceed to sell off good assets at bargain prices, extract high fees or go off chasing shadows ... they leave a trail of misery. Some have a clue ... but most don't. There is actually alot to be said for US style Chapter 11 reorganisation.

[Tony Two Gloves]

I don't think even Bernard Whimp would offer 0.10 on this!

Does anyone really believe a JV deal will happen? I don't think any large corporate would want to be associated with them after they have recklessly lent out the publics money and investors will suffer losses.NZF have no bargaining power and wasn't part of the proposed deal to provide capital for NZF Money? Not much point now....you have to love the 4.45PM market announcements, at least it wasn't on a Friday!

Mini, isn't that an annoncement coming through now? Oh no it was just someone emailing me the winning Lotto numbers.....

[Tony Two Gloves]

Serepisos should have gone to NZF for a loan, looks like they will lend to anyone and he could have used his 2007 valuations!!

[invessi]

Serepisos should have gone to NZF for a loan, looks like they will lend to anyone and he could have used his 2007 valuations!!

TTG, I am starting to wonder if you are the disgruntled borrower from NZF that threatened to take the company, particularly Mark Thornton to task for not meeting some expectation that you had, you are obviously not a shareholder and you are going out of your way to run the company down, how about coming clean and declaring your interest!

[Tony Two Gloves]

After you Invessi, I am intrigued how you can continually support the company and the statements it makes when the facts have made liars out of them. So what is your connection and why do you support them so strongly?

[Tony Two Gloves]

Actaully I don't mind going first.....

1 I have never borrowed from NZF or applied to do so.
2 I have held shares in NZF on several occasions but currently have no shares or notes.
3 IMO I have always advised people not to listen to the directors but gather the facts from S&P, Covenant and auditors and now the receivers. In hind sight this has been spot on. For a company that builds their reputation as being different from all the failed finance companies they have proved to be just the same, it just took a little longer.

I hate seeing people getting scewed over and everyone here has (debenture holders, shareholders and note holders) whilst NZF continues painting a rosy picture.

Anyway, your turn now Invessi.

[Enumerate]

TTG, have you ever had business dealings or relationship with NZF (beyond occasionally owning shares or notes)?

[invessi]

Actaully I don't mind going first.....

1 I have never borrowed from NZF or applied to do so.
2 I have held shares in NZF on several occasions but currently have no shares or notes.
3 IMO I have always advised people not to listen to the directors but gather the facts from S&P, Covenant and auditors and now the receivers. In hind sight this has been spot on. For a company that builds their reputation as being different from all the failed finance companies they have proved to be just the same, it just took a little longer.

I hate seeing people getting scewed over and everyone here has (debenture holders, shareholders and note holders) whilst NZF continues painting a rosy picture.

Anyway, your turn now Invessi.

TTG, I am a share investor and I have some shares in NZF, I have also had past business dealings with them, whilst the current picture is not pretty, I still believe they have a future, particularly as the non bank residential mortgage sector (a potential $10b market) has considerable potential for growth, as does the RMBS market, the new partner will allow for some acceleration in my view! I receive the company's reports and I do look at them closely, I have no cause to believe that there has been any inaccuracies in their reporting. There have been suggestions that they have used outdated valuations for refinance, I very much doubt that, it goes against their covenants! As for Mike Pero Real Estate, I am getting feedback from friends who are in real estate and MPRE are starting to get traction!

[invessi]

GENERAL: NZF: NZF - Continuous Disclosure 27-09-11

Further to the announcement of 10 June 2011, NZF is pleased to announce that
it has entered into a conditional Sale and Purchase Agreement with Resimac NZ
Home Loans Limited (RML) which will see RML acquire a majority shareholding
in NZF's home loan securitization operations. There are a number of
conditions to be satisfied with the major ones being:

- Completion of a Shareholders Agreement which will among other
matters, give NZF certain minority protection rights.
- Receipt of certain IRD taxation rulings.
- NZF shareholder approval.

As the transaction will constitute a 'major transaction' under the listing
rules (but not the Companies Act 1993), shareholder approval by ordinary
resolution is required and corporate advisory firm Campbell Macpherson
Limited has been commissioned to prepare an independent report which will
accompany the notice of meeting to assist sha
reholders. All conditions are
expected to be satisfied on or before 30 November 2011 with settlement
shortly thereafter.

The signing of this agreement follows an extensive period of due diligence
which has been referred to in previous market announcements and NZF is
excited with the prospect of having RML as a partner in its home loan
business and the significant growth opportunities this will bring. RML's
parent is one of Australia's most respected non-bank lenders, providing
funding via its established and longstanding partners and to date having
funded more than A$12b.

ENDS
End CA:00214262 For:NZF Type:GENERAL Time:2011-09-27 11:21:53

[invessi]

Pero has high praise for low commission model

Thursday 22 September 2011


QV August 2011 – the regions
Mike Pero has hailed the success of his ‘next generation’, low commission real estate company, announcing it has established 17 franchise owners and a total of sales force of 23 between Auckland and Christchurch.

Mike Pero Real Estate launched in February this year and in May the first agents came on board in Auckland and Canterbury, offering the promised commission rate of 2.95% (plus GST), below the national average for real estate commissions from the major industry players or around 4% (plus GST).

"We did our market research before we launched and found that New Zealanders wanted lower commission rates, without compromising on service," said Pero.

"Our next generation culture and philosophies have hit a note with New Zealanders, and we're growing ahead of our expectations."

He said the Mike Pero business model was able to provide a lower commission structure by reducing middle management, new marketing technology and less bricks and mortar.

"We look at the traditional industry procedures and styles and question their effectiveness – we embrace online technology, innovative marketing and forward thinking - these are our points of difference that allow us to offer a better proposition to the vendor."

Pero said that on average, the lower commission rate of 2.95% would save sellers between $3,000 and $8,000, depending on the sale prices and other office commission rates.

"At a time when every cent counts that's a huge saving - for many people that could be a couple of months salary."

He also attributed the fact that Mike Pero Real Estate agents generally own their own franchises for their success in attracting top agents.

"Our model gives them the opportunity to build a business, not just a job, and acquire equity that could one day provide for their retirement, or at least a lump sum of cash."

The company aims to recruit from the top 20% of agents, "and there is no room for complacency - it ends up adding to the operational costs, which typically gets added on to the customers' fees."

[minimoke]

GENERAL: NZF: NZF - Continuous Disclosure 27-09-11

Further to the announcement of 10 June 2011, NZF is pleased to announce that
it has entered into a conditional Sale and Purchase Agreement with Resimac NZ
Home Loans Limited (RML) which will see RML acquire a majority shareholding
in NZF's home loan securitization operations.

Took a while in coming but looks like they are nearly there.

[minimoke]

Pero has high praise for low commission model


You wouldn't expect him to say much different would you. Another advertorial dressed up as news. And it isn't really news is it? It copying the Kiwibank low brick and mortar model and 1% commission are freely available in the market.

[invessi]

You wouldn't expect him to say much different would you. Another advertorial dressed up as news. And it isn't really news is it? It copying the Kiwibank low brick and mortar model and 1% commission are freely available in the market.

Well, its the first meaningful release of information on how the new venture is developing, I am aware that in the bays area of Auckland where I live, they are getting properties away!

[Xerof]

So is this a take out of Westpac funding the SPV? What does this do for NZF other than put Resimac as the owner/funder of the securitisation vehicle?

[invessi]

So is this a take out of Westpac funding the SPV? What does this do for NZF other than put Resimac as the owner/funder of the securitisation vehicle?

The Australian model is that they have selected brokers who visit clients, enter the data into the Resi software and if it fits, they issue a loan offer on the spot.....watch this space!

[Tony Two Gloves]

Enumerate - Yes I have had some business dealings (not as a borrower) with them back when there SP was well over a $1.00. I found them extremely arrogant at the time and then decided to liquidate the majority of my shares which in hindsight was brilliant in realtion to where the SP is now. The only downside was I didn't sell the lot at the time.....

Invessi - It was the receiver who made reference to outdated valuations on loan roll overs, I think I would trust the receiver more than the company denying this. Whilst this is an anonymous forum, I doubt you are just a casual shareholder as the info you provide is not readily avalable to "casual shareholders".

At the end of the day this Resi deal should ensure the survival of the company and I am amazed they got it over the line so well done to NZF on that front. I suppose the devil will be in the detail as to pricing etc and what this will mean to all shareholders. Giving up a majority stake in the only part of your business that is profitable (pero's only made $10K last year) would not be a decision made lightly and would indicate there were no other viable options for survival.

[Xerof]

The Australian model is .....

I know how Savilles model works - I didn't ask for an explanation of that

TTG has largely answered the questions I posed anyway, and I would agree with him - Saville will gouge most of the profits from new business. Resimac criteria are very demanding - thats why they are so successful, and have not had the write-offs suffered by their peers. Time will tell as to whether they can get the required volumes of quality lending from this market.

I echo TTG's comment - good on NZF for getting it this far, but I'm not enthused about a long term future

[invessi]

Resimac to take majority stake in NZF's securitisation operations

NZF Group has at last revealed its long-awaited equity partner is Australian non-bank mortgage lender Resimac.
Tuesday, September 27th 2011, 1:20PM
by Jenny Ruth

Resimac will buy a majority stake in NZF's home loan securitisation operations for an as yet undisclosed sum. In June, NZF resumed originating home loans under its $225 million warehouse facility provided by Westpac.

NZF has been looking for an equity partner since early last year and Resimac has been conducting due diligence for months.

NZF says a number of conditions remain to be satisfied with the major ones being the completion of a shareholders agreement "which will, among other matters, give NZF certain minority protection rights," tax rulings and NZF shareholder approval.

NZF has commissioned corporate advisory firm Campbell Macpherson to prepare an independent report for shareholders.

While the price hasn't been disclosed, NZF says it will constitute a "major transaction" under the NZX listing rules which require shareholder approval for any transaction in excess of 50% of a company's market capitalisation. NZF shares last traded at 3.5 cents, giving it a $3.8 million market capitalisation.

NZF says it expects all conditions will be satisfied on or before November 30 and settlement should take place shortly afterward.

The transaction will help shore up NZF's balance sheet. Its net equity at March 31 was $10.3 million but that was before its finance company, NZF Money, went into receivership on July 22.

Last week, NZF said it would write off its $5.1 million investment in NZF Money and will record a $10.7 million loss from discontinued operations in its accounts for the year ending March 2012.

"NZF is excited with the prospect of having (Resimac's New Zealand arm) as a partner in its home loan business and the significant opportunities this will bring," the company says.

Resimac's parent is one of Australia's most respected non-bank lenders, providing funding via its established and longstanding partners and to date having funding more than A$12 billion (NZ$15.1 million).

Resimac set up its New Zealand office last year and this is its first significant move into the New Zealand market.

Founded in 1985 by the New South Wales state government, Resimac's current 80% shareholder is Ingot Capital Management, a company controlled by Duncan Saville who is one of Infratil's directors. Other shareholders include Westpac, National Australia Bank, Macquarie Bank and Credit Suisse First Boston and it also has standby support from Perpetual Trustee Company.

[minimoke]

Resimac to take majority stake in NZF's securitisation operations

NZF Group has at last revealed its long-awaited equity partner is Australian non-bank mortgage lender Resimac.
Tuesday, September 27th 2011, 1:20PM
by Jenny Ruth

Did you forget your post on 27/9. Just because the news is repeated doesn't necessarily make it any better.

[Tony Two Gloves]

Hehe the NZF spin doctor must be getting Alzheimer’s.......

[Enumerate]

You two are not building any credibility by taking cheap shots.

The post actually contains some useful detail additional to the press release.

[minimoke]

The post actually contains some useful detail additional to the press release.
And those details are??

[Enumerate]

1) Resimac's parent is one of Australia's most respected non-bank lenders, providing funding via its established and longstanding partners and to date having funding more than A$12 billion (NZ$15.1 million).

2) Resimac set up its New Zealand office last year and this is its first significant move into the New Zealand market.

3) Founded in 1985 by the New South Wales state government, Resimac's current 80% shareholder is Ingot Capital Management, a company controlled by Duncan Saville who is one of Infratil's directors.

4) Other shareholders include Westpac, National Australia Bank, Macquarie Bank and Credit Suisse First Boston and it also has standby support from Perpetual Trustee Company.

[minimoke]

1) Resimac's parent is one of Australia's most respected non-bank lenders, providing funding via its established and longstanding partners and to date having funding more than A$12 billion (NZ$15.1 million).

2) Resimac set up its New Zealand office last year and this is its first significant move into the New Zealand market.

3) Founded in 1985 by the New South Wales state government, Resimac's current 80% shareholder is Ingot Capital Management, a company controlled by Duncan Saville who is one of Infratil's directors.

4) Other shareholders include Westpac, National Australia Bank, Macquarie Bank and Credit Suisse First Boston and it also has standby support from Perpetual Trustee Company.
If that detail is interpreted as being beneficial to shareholders then I guess it is useful.

[Enumerate]

If that detail is interpreted as being beneficial to shareholders then I guess it is useful.

Sheesh, Mini ... if it not clear that Resimac is very much a "blue blood" non-bank mortgage lender ... and this is the quality of the new owner of NZF Homeloans ... and this might be of interest to NZF holders ...

Also, it is clear that Westpac has an interest in Resimac ... and are also the current NZF Homeloans wholesale provider ... and this might be of interest to NZF holders ....

Given that Duncan Saville was also one of the NZ government spurned restructurers of SCF ... and that he now has an exposure to the NZ non-bank mortgage market ... and can be expected to be interested in aggressively growing this interest ... and possibly broadening his interests ... and this might be of interest to NZF holders ...

What will be impacts be on the Pero business, with a high quality non-bank mortgage lender actively interested in writing new, high quality, business in NZ ... would this be of interest to NZF holders?

Is it likely that NZF will be liquidating a significant equity position in NZF Homeloans as a result of the transaction? If so, what does the future hold?