Provincial Finance placed in receivership

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Mid-sized finance company Provincial Finance has been put into receivership today.

Friday, June 2nd 2006, 2:37PM

"Early in April it became apparent that Provincial had breached certain covenants and ratios in its Trust Deed," says Peter Baynes, chief executive of Perpetual Trust, which is the trustee for the debenture stock issued by the company.

"The trustee was also concerned at the adequacy of Provincial’s provision for doubtful debts.

"On 13 April we wrote to Provincial requiring those breaches to be remedied. We also formally requested the company’s auditors, Ernst & Young, confirm the appropriate provision for bad and doubtful debts at 31 March 2006.

"A few days later, we formally advised the Registrar of Companies that we believed Provincial was in serious financial difficulties.

"Over the period since then, Provincial’s shareholders have made strenuous efforts to address the problems but we have formed the view that the best course to protect the interests of the debenture stock holders, who have invested some $300 million with Provincial and whose interests we represent, is to place Provincial into receivership.

"Provincial’s shareholders, together with the trustee and receivers are in discussions with external parties about a recapitalisation of Provincial.

"The receivers have secured the assets of Provincial and are in the process of determining the financial position while the potential recapitalisation plan is explored. Given the size of Provincial and the number of loans, this could take some time. The receivers will prepare and send a report to investors on their initial findings of Provincial’s financial position as soon as possible," Baynes said.

The companies put into receivership are: Consumer Credit Ltd, South Auckland Cars Ltd, and Provincial Finance Ltd.

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