Investors in MFS Pacific Finance, now called OPI Pacific Finance, will face a tough decision today over whether to allow the business to try to repay them over the next three years or place it in the hands of receivers.
About 12,000 debenture and noteholders have $313.4 million
tied up in the finance company, which defaulted on payments in January when its sister company, the ASX-listed Octaviar, was unable to meet a put option agreement to pay overdue debts.
The 111-page moratorium documentation, sent out just over two weeks ago, promises an initial $23.1 million payment to investors if they agree to the moratorium by today, followed by quarterly repayments from September.
But much of the ability to repay the debt relies on OPI Pacific Finance reaching an agreement with Octaviar to convert the put option to a standstill deal, which has yet to be agreed to.
OPI has given Octaviar until August 29 to do so.
OPI itself expects only $122 million of its $476 million in cash, loans and investments may be recoverable.
It has told investors that if they don't vote for the moratorium proposal the business will go into receivership, with debenture holders likely to receive up to half of their investment back and unsecured noteholders likely to receive nothing.
But Robert Oddy, an Auckland financial adviser, said voting for the moratorium could be just as much of a gamble because Octaviar's unstable financial position meant it was not known how much money OPI would receive back.
