KEY POINTS:
The finance company sector was thrown into further turmoil today when Five Star Consumer Finance was revealed as the the seventh finance company in 18 months to be put into receivership.
It was the third finance company to collapse in just over a week, following the appointment of
receivers for Property Finance Group and Nathans Finance.
Around 3,000 investors are believed to be caught up in the collapse, radio reports said today.
Five Star was incorporated in 1988 and is a wholly owned subsidiary of Antares Finance Holdings Ltd, owned by North Island shareholders.
It is the 41st ranked finance company by size according to a New Zealand Herald survey this week. Its trustee is Covenant Trustee Co Ltd.
Covenant managing director Graham Miller advised that the board of directors of Five Star had requested Covenant to appoint receivers to Five Star and its subsidiaries.
Richard Agnew and Anthony Boswell, partners at Pricewaterhouse Coopers, have been appointed as receivers.
"The board of directors requested Covenant to appoint receivers because of serious concerns as to the state of the debenture market and the ability of Five Star to attract new funds and retain existing investments," the receivers said in a statement.
"After consultation with Five Star's auditors and advisers, the board of directors reluctantly concluded that Five Star was unable to operate in this market."
Mr Agnew said the directors of Five Star felt they could not trade in the current environment.
He told Radio New Zealand it would take a couple of days to sort what Five Star's financial position is.
Based on other companies' experiences he said it would take two or three weeks to come up with a definitive action plan -- to know how much of their money investors are likely to get back.
Asked about problems common to all the collapses, Mr Agnew said: "Obviously the whole liquidity market has tightened up.
"Also, I certainly believe with this company, the effect of the other companies going into receivership has affected this company's rate of reinvestments and trying to get new investments into the company."
Mr Agnew said the effect of Five Star's collapse would be felt by other finance companies.
He was unable to say how many debentures were outstanding or how big Five Star's loan book was.
PWC had set up a website for Five Star's website.
Five Star's auditors are BDO Spicers.
NZAX-listed Property Finance yesterday was put into receivership with debenture debts of over $80 million and loans of over $630m.
Last night Brendan Gibson of receivers Ferrier Hodgson said it was too early to confirm Property Finance's claims debenture holders would get all they had lent.
ABOUT THE COMPANY
Five Star Credit (FSC) is part of a privately owned group of companies trading under the Five Star banner. A report on the internet posted in 2001 about the company said the group had total assets of more than $20 million then.
That report said FSC focused on providing consumer credit facilities to retailers throughout New Zealand.
It noted other companies in its group include Five Star Rentals, which is involved with renting pre-built cabins, and Five Star Finance that offers commercial loans to small and medium sized businesses.
In October 2000, FSC was successful in winning preferred supplier status for financial services with the New Zealand Retailers Association (NZRA), which has 3000 members with over 8000 outlets.
Five Star is chaired by Marcus Macdonald and its two other directors are Nicholas Kirk and Anthony Bowden. Its general manager is Wayne Wade.
- NZPA