KEY POINTS:
Dominion Finance has written to investors updating them on its moratorium proposal as more instances of non-repayment of matured investments emerge.
The company announced last Tuesday that it was considering suspending payments to debenture holders after becoming concerned about the liquidity of subsidiaries Dominion Finance Group and North South Finance. The proposal would still require investor approval.
"At this time the proposal to explore a moratorium appears to have been well received by important stakeholders. As a practical matter, the commercial terms of the moratorium will take some weeks to develop, as a number of stakeholders need to be consulted, including trustees, banks, and potential equity providers, before stockholders are asked to vote," wrote chief executive Paul Cropp in a letter released on the NZX yesterday.
"In the meantime, DFG and NSF are seeking the support of their respective trustee to allow the company time to develop the detailed terms of moratorium, rather than the trustee exercise rights it has to appoint a receiver."
More investors have contacted the Business Herald about non-repayments of their matured investments - something commercial experts have cited as a potential breach of the terms of the trust deed.
One Auckland investor still has $250,000 tied up in North South Finance. A sum of $100,000 matured on June 18 - the day after the company announced a proposed moratorium - while the remaining $150,000 matures next March.
A drop in the company's share price in early June had prompted a call to the company, only to be told that that there would be "no trouble" getting his investment paid out in full. He was even quoted $106,000 as the total in principal and interest that would be paid back to him on the 18th.
"I'm really furious - I was let down badly."
He said he had invested with North South Finance in the past - having known the founder and his sons who later took over - and had never had any problems until it was taken over by Dominion Finance in March 2006.
Another investor's debenture holding of $10,000 matured on June 16 but was not transferred to his bank as requested. When he rang the company, he was told of a "glitch in the system" and that he would be sent a cheque.
He has since received the cheque, but the company has told him that it would be dishonoured.
Another who looks after the affairs of trusts and estates spoke of a tale of two investments; one estate had its $20,000 investment which matured on June 13 come through by direct credit, but one trust with $30,000 maturing last Wednesday still has not been paid out - despite a moratorium not being in place.
HAVE YOU BEEN AFFECTED?
Dominion Finance investors with a story to tell can contact the Business Herald - business@nzherald.co.nz
