Noteholders: Wake up now!
Glad to see the thread has finally come back to something relevant to investors.
The Capital Notes election process is underway and has only six business days to run. This includes time to get your election notices into the hands of the registrar.
Come on Noteholders, time is running short. All the pontifications and opinions in this thread may make the posters feel good - and some of them may even have money at stake - but there are serious decisions you need to make and time is running out.
Your choice # 1:
The nominally safe option (my italics and no opinion impilied) - roll your notes over on the new terms.
These appear to be: Renew on new terms of 6% pa for 5 years, sell on the secondary market if you can before 2016 (likely at a price way below par) or hang on until 2016 and hope NZF decides to redeem the Notes for cash then. If they do, this will be in 2016 dollars. At 2%+ pa inflation the buying power of your capital will have been been seriously eroded.
Your choice # 2:
Elect to take shares at a small discount to a volume weighted average price of 95% of what NZF shares traded at over 20 business days prior to the maturity date of the notes, or if no shares were traded during that time, at 95% of the last price . Important: Not electing to accept the new terms for the Notes will automatically result in conversion of your Notes to shares.
The twenty business day window of volume-weighted share prices to be used to set the Note-to-shares conversion rate, started yesterday (I think). The last price at which the shares traded at to date was 10c. (There may be scope for fun and games over the next few days, either way.).
A rough calculation based on the assumptions that 1/3rd of Notes will convert to NZF shares at 95% of the last traded price of 10c:
Noteholders will acquire about 69 million shares in total adding to the 71 million shares on issue, largely held by founders of NZF and related parties.
As Enumerate put it a few days ago, taking shares could be the "punk" option for Noteholders who are sufficiently disgusted at the rollover terms, and who can stomach moving to pure equity. Noteholders who must preserve capital at all costs need to think particularly carefully about this option.
As Enmurate has said previously here, the Trust Deed allows the company to change its mind after the election process and redeem those Notes for cash, where the holder didn't choose to accept the new terms. A theory put forward in this forum is that this might just come about because the company - which is controlled by the major shareholders - doesn't want to see a share price collapse. Links provided by Enumerate on the Trust Deed and the Investment Statement are in an earlier posting.
One view is that the NZF share price will in time improve, because in part, NZF didn't crash and burn like so many other finance companies, and that the company has a different business model with less exposure to dubious loan backing, than other finance companies. These are some factors for consideration; there may be others.
So there you go; my attempt to get back to the guts of the matter.
Good luck! No one said investing would be easy.:ohmy:
Everything above is my view and my understanding of the situation and obviously I'm not offering advice.