A major New Zealand financial services company is believed to be interested in buying Western Bay Finance.
The cash-strapped Western Bay Finance, which began operating in Tauranga 17 years ago, is in its third week of putting a hold on issuing personal loans because new investment funds have virtually dried up.
Jim
Smylie, the Tauranga-based founder and chairman, said last night that he still could not make any comment on the company's present situation.
He was, however, waiting for word on talks with "a third party" that could boost Western Bay Finance's trading position.
Staff were still working in the company's 12 offices around the country.
A spokesman for Covenant Trustee Company - which looks after the interests of debenture holders - confirmed they were being updated on the sale process.
He indicated the talks were "quite fruitful and we believe positive. I would think Western Bay is on the threshold of making a full disclosure."
Western Bay Finance, which announced a profit of $1.2 million in late May, has more than $50m out on secured loans, averaging $9000 each.
It also has 3000 investors who have placed $47m in debenture stock fetching up to 9.5 per cent. Nearly 70 per cent of those investors, representing $35m, come from the Western Bay region.
Traditionally, more than 70 per cent of the Western Bay Finance investments have been rolled over - but over the past six months the rate of re-investment has slipped dramatically and this has affected the company's liquidity.
Investor sentiment turned after Provincial Finance and National Finance 2000 collapsed.
Mr Smylie told the Bay of Plenty Times a fortnight ago that he thought finance companies might have to operate differently in the future by finding funds from other sources than debenture stock and investments from stockholders.
