Get-tough collectors boost Provincial hopes

Failed Provincial Finance's loan book is benefiting from tougher collection methods and, two months after the company's collapse, the receiver still believes debenture stock holders will get "most if not all" of their money back.

The Companies Office yesterday issued a report on the situation at Provincial Finance and related companies Consumer Credit and South Auckland Cars from receiver John Waller of PricewaterhouseCoopers.

Waller said loan recoveries were proceeding well, and if they continued at expected levels, "secured debenture stockholders should recover most, if not all their principal".

"Together with management, we have strengthened the collection processes ... with a view to reducing the level of arrears."

Moves to increase recoveries included more use of collection agents for "face-to-face" recovery work, changing employees' working hours so they could do more collection work in evenings, selling repossessed vehicles more quickly and making more use of legal options.

Waller also said he had sold or entered into commission arrangements with third parties to recover about $20 million of written-off debt.

He expected to be able to make an initial 10c to 20c in the dollar return to debenture stock investors by the end of September.

Investors holding $17 million worth of redeemable preference shares were unlikely to get anything.

Provincial was placed in receivership in early May - owing 14,000 secured debenture stock investors about $324 million - after breaching its trust deed because of soaring bad debts among its $325 million of loans, made mostly on used cars.

But Waller's report shows that at the end of May, Provincial owed secured investors just under $300 million and its loan book stood at $308.9 million plus another $1.7 million owed on a loan book it had purchased.

Loans already written off and excluded from that figure amounted to $37.2 million.

"These loans will be reviewed and recovery actions, where appropriate, will be continued" said Waller.

Provincial's provision for bad and doubtful debts in its $263 million in consumer loans was $80 million or about 30 per cent.

The response to receivership sales of repossessed vehicles had been good and Waller said he was planning to sell South Auckland Cars' land and buildings over the next three months.

Other assets had been retained to enable the company's continued operation which Waller said was underpinning the loan book's value.

He said it would take some months to finalise what would happen to the company.