NZF Group (NZF and NZF010)

[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/companie...8536/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/companie...8536/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!