NZF Group (NZF and NZF010)

[minimoke]

Capital Noteholders that do not elect to accept the "Renewal Option" and are allocated ordinary shares, should note that NZF last paid a dividend on its
shares in December 2008. NZF will not be paying a dividend in this financial year and given the fragility of the economic recovery and the major impact of events that have occurred in the last three years, NZF are unable to ascertain at this stage when dividend payments will recommence.

Malcolm Lindeque
For and on behalf of the board of directors
Company Secretary

ENDS
End CA:00205782 For:NZF Type:GENERAL Time:2011-02-18 10:31:59

Clearly NZF want note holders to convert. Clearly the company is deep in the poo - no dividends in sight and no money to pay note holders.

There are a number of scenarios that can be developed in this situation. Heres one.

The majority shareholders have seen their value hammered over the past few years. They want to retrieve as much value as they can. They cannot maximize value if their shares are diluted by Noteholders taking up shares. Note holders can expect to sell their notes on the market (yea right) but at a likely significant discount. This isn't a problem for as long as they can be suckered into thinking NZF has a future and their notes will be paid out. In the meantime shareholders sell on market. Last sale was $0.10. If they can sell at $0.11 they have made 10%, shrinking their loss exposure. If they can sell in a merger / takeover they will get something back - but not as much if the noteholders have diluted share pool.

Paying interest to noteholders will give the illusion the company is fine. It also buys shareholders time to stich up a deal to sell their shares for the best return. How that sale impacts on Note holders is not of concern once they have exited the business.

In the meantime there is probably enough cash in the business to pay Director Fees which are in lieu of dividends. If there are large noteholders they may have a large enough stake to seek a position on the Board -again diluting the pool of fees available to existing directors.

Edit: in 2010 they paid $697,000 in Director fees (Callahan got $225,000). For a company worth $7.6m thats just under 10% "Special Dividend"

No mater how it is dressed up the best outcome is for Noteholders to roll their investment over for another 5 years.

[minimoke]

NZF Group Limited (NZF) Capital Notes - expiry date for election of "Renewal Option" of Capital Notes.

Need to keepupwithit getontoit. See post 183

[invessi]

TTG, There is only one board, that is the board for the group, NZF Money is part of the group, you said "Craig Alexander has never been on the board" so obviously you are incorrect on this point - also, I saw a document recently that showed Craig Alexander as Acting Chairman!

[minimoke]

TTG, There is only one board, that is the board for the group, NZF Money is part of the group, you said "Craig Alexander has never been on the board" so obviously you are incorrect on this point - also, I saw a document recently that showed Craig Alexander as Acting Chairman!

Invessi, I think you are confusing NZF with NZF Money.

Craig Alexander joined the board on NZF Money Limited on 29 October 2010. This was before Richard Wadell left on 31 Dec 2010. His illness was announced 20 March 2010.

At post 192

My understanding is that Craig Alexander - lawyer is acting Chairman of NZF, at the time Richard Waddell became ill, it was promptly announced to the NZX, he has not resigned that I am aware of!

The Board of NZF Money are now: Callaghan, Alexander, Henderson, Huljicjh, O'ceonner,and Thornton.

If we want a discussion on NZF Money perhaps you could start a new thread.

[Tony Two Gloves]

Invessi.....yes you are getting a little confused and that is being kind, I stand by what I said because it is a verified fact as per the link in previous post. You have been incorrect on several points NZF Money has a different board and set of directors from NZF Group, Finance Direct and MPM. Craig Alexander may be acting chairman for NZF Money but he is not and has never been a director of the listed entity NZF Group. He is also chairman of Finance Direct - presumbly if he was chairman of NZF Group both Finance Direct and NZF Money would not be able to call him "Independant" in their respective offer documents.

it really is ok, you can say sorry TTG I was wrong and you were right

[Enumerate]

One thing I cannot understand is the pro-election attitude of NZF. I would have thought they would be equally happy for conversion to equity (this is actually a better outcome for the company - if not the existing shareholders).

Comparison to ALF and the no-dividend reminder indicates that directors are actually taking a negative view on their own share price.

Maybe they think that the election deal they are offering sucks - it needs a bit of "stick" applied, in the absence of any feasible "carrot".

[Xerof]

Enumerate,

I think I can understand their desperation completely - they want bondies rolled, not converted - I really do think its that simple, for two reasons:

dilution of their own holdings
danger of a strong ALF-like sell off after the dilution, adding further to their personal holdings woes

[minimoke]

One thing I cannot understand is the pro-election attitude of NZF.

It strikes me that this notice can be construed as a recommendation to take up the notes and a recommendation against the shares. I guess they are covered by the Financial Advisors requirements - but I missed the bit on the end where its usual to recommend seeking independent financial advice before making a decision.

[Tony Two Gloves]

I agree Xerof, if the bond holders all rolled over what a great result for major shareholders, shareholding stays in tact and they have just reduced the interest payable on the notes by $750,000 per annum to boot.

If this is what they wanted they should have offered a better interest rate.

[Xerof]

Yes, makes you wonder whether they have completely mis-read the situation, expecting obedient and/or lethargic bondholders to do the "right" thing and roll.

Fatal mistake was to make the 'default' position to convert ( it has been the other way round in any issue I have been involved in), but that may have been set in concrete in the Trust Deed at issuance.