F&P Finance flourishing

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While its parent company has a debt problem, Fisher & Paykel Finance is flourishing since it received its government guarantee of its debentures.

Monday, February 23rd 2009, 9:57AM

by Jenny Ruth

"The finance company is actually going along pretty well in terms of its bottom line and funding base," says Fisher & Paykel Appliances managing director John Bongard.

"We’ve had in excess of $100 million in terms of debenture finance" since the guarantee was announced on November 21 last year. That has allowed the finance company to reduce its reliance on bank funding facilities. It had more than $275 million in committed undrawn bank facilities at January 31.

Reinvestment rates have also been strong since the guarantee was granted and exceeded 90% in January.

The finance company’s latest accounts for the six months ended September 30 showed it had total assets of $385.1 million, up from $380.4 million six months earlier, and equity of $44.8 million

Increasing bad debts have eroded earnings over the past four months but the cost to income ratio remains within budget and on forecast at 42%, the company says.

However, just as its parent company is seeking more equity, so too will the finance company need more equity, with current estimates about $50 million, in additional capital some time in early 2010, it says.

This is because of recent regulatory changes and proposed regulatory changes introduced by the Reserve Bank which will mean the finance business will be seeking a credit rating with an approved credit rating agency and will be subject to minimum capital ratio requirements.

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