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More MFS trouble

The MFS group has wider troubles with one finance company, MFS Boston headed for a moratorium and wind up, and MFS Pacific admitting its put option with its ASX-listed parent isn't, currently, worth exercising.

Thursday, February 28th 2008, 6:42AM
Around 1700 investors have $38.5 million invested with the company.

MFS New Zealand last year trumpeted MFS Boston as: "A very well managed finance company with a high quality loan book.

"We see huge opportunity for Boston, and we expect it to be the first of a new generation of income product and one that will lead the market as it shifts away from the traditional finance company business model," MFS New Zealand chief executive Jason Maywald said in September.

At the time Maywald refused to provide Good Returns with any further information about the company and why it was so different.

Now the company is seeking investors approve a moratorium where the company will be wound down.

MFS Boston directors are confident that if the moratorium is approved then based on a current assessment of the position of the company, investors should be repaid 100 per cent of their investment together with interest. The directors' conclusions are supported by a report by advisory firm KordaMentha which carried out an assessment of the company's loans and financial position.

MFS Boston director, Kingsley Turner, said MFS Boston has a strong loan book and the decision to propose a moratorium is a result of changing market conditions.

"MFS Boston has been monitoring the changes in the finance sector over recent months. The financial environment has changed dramatically and a moratorium is now the best option for investors," Turner said.

Meanwhile the directors of MFS New Zealand asked for more time to put together their moratorium plans for MFS Pacific. They say the process is taking "much longer than we had expected due to the complexity of the issues involved."

MFS Pacific is in formal negotiations with its parent about future funding and "its obligations under the Put Option."

They say, after receiving legal advice, that "it would be in the best interests of Investors for MFS Pacific to exercise the Put Option at this time."

Also the date for the mortatorium meeting has been put back from early March to the end of the month.

A review of MFS Pacific's assets, which comprise a large number of loans and investments, has been completed however a report on their status is still weeks away.

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