KEY POINTS:
Cymbis New Zealand, a small finance company acquired late last year by troubled Australian firm MFS, was this week placed in receivership owing 797 investors $6.9 million and becoming the 19th finance company failure in two years.
The sole director of Cymbis, which last week changed its name
to Fairview New Zealand, is Owen Tallentire, the former chief executive of Capital+Merchant Finance which until late last year owned the company.
However, Capital+Merchant's failure in November left Cymbis unable to meet its December quarter interest payments, and MFS-owned FP Holdings purchased its assets and assumed the liability to meet principal and interest payments.
FP Holdings injected $1.4 million in capital into the company which was then able to meet December and March quarter interest payments, said trustee Louise Edwards of Perpetual Trust.
No principal was due for repayment over that time.
Edwards said it had been FP Holdings' intention to realise Cymbis' assets prior to the maturity dates of the stockholders' debentures to repay stockholders in full and on time.
"However, in early May, FP Holdings advised that they had been unable to realise the assets as originally contemplated and as a consequence there were insufficient funds to meet debenture maturities."
A spokesman for Octaviar, as MFS is now known, said the company had been unable to cover $5.4 million principal payments scheduled for repayment this month.
Edwards said she and the company's directors had agreed the best measure to protect investors' interests was to place both companies into receivership.
MFS subsidiary Octaviar Pacific Finance is seeking a moratorium from investors owed over $300 million after it failed to make payments at the end of January. Another subsidiary, MFS Boston, secured a one year moratorium in March from investors owed $38.5 million.
According to its prospectus, Cymbis lent money on a first mortgage basis to a maximum of 75 per cent to value ratio.
Furthermore, all of its loans were insured against loss with "certain syndicates at Lloyds of London".
Rod Pardington of receiver Deloitte said: "We're currently assessing the status and recovery prospects of the loans and that will include reviewing the insurance status."
MORE STRIFE
* Troubled Australian company MFS is unable to cover $5.4 million in maturing investments at small finance company Fairview, triggering the firm's receivership.
* MFS acquired Fairview from Capital+Merchant Finance after that firm's collapse late last year.
* Fairview, formerly known as Cymbis, owes 797 investors $6.9 million
* It is the 19th finance company casualty in two years.
