PFG trades on but doubts remain
The beleaguered Propertyfinance Group (PFG) opened for business again on the stock exchange this morning, one month after trading in its shares was halted by the NZX.
Wednesday, September 26th 2007, 11:17AM
In a release to the exchange yesterday PFG chair, Barney Sundstrum revealed a raft of changes to the company in light after its major trading arm, Propertyfinance Securities (PFSL), was placed into receivership late last month.In the NZX release Sundstrum said the group would seek funding to cover a $67,000 quarterly interest payment on $3.7 million of preference shares due on September 30. If it fails to make the payments PFG would be in breach of its obligations.
Mark Bellas, Leigh Davis and Denis Hazlett, have resigned as PFG directors and the group is also negotiating the early termination of leases on three company buildings.
Despite the uncertainty Sundstrum said the PFG directors believed "neither the liquidity problems encountered by PFSL which gave rise to its receivership, nor the receivership itself, has materially adversely affected the quality of the PFG group's loan receivables".
"Further adjustments to the Group's NTA [net tangilbe assets] in light of the receivership of PFSL may be necessary and indeed are likely."
Sundstrum said the risks included the costs imposed by PFSL's receivership and the current market conditions which affected the saleability of its mortgage-backed securities. "The on-going solvency of PFG is heavily dependent on the successful rescheduling of its liabilities together with the sale of fixed assets and/or placement of fresh capital," he said.
PFSL owes about 4000 retail investors $80 million in debentures and has issued about $550 million of mortgage-backed debt securities to institutional investors through which it funded its residential and commercial loans business.
PFSL trustee Guardian Trust holds Propertyfinance assets of loans and cash valued at $670m.
PFG shares last traded on the NZAX on August 22 at $1.10 but Sundstrum said it was impossible to provide any earnings-based guidance on future value.
As at 11am no trading in PFG shares had occurred.
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