Hanover says market continues to deteriorate
Property market and global market conditions have deteriorated significantly since its investors voted in favour of its debt restructure plan in early December, Hanover Finance said in its March investor update.
Wednesday, March 18th 2009, 4:39PM
by Jenny Ruth
Accompanying its first principal payment to both Hanover and subsidiary United Finance debenture holders, the update says the company believes market conditions will be "challenging" for some time.
"But we also believe that our repayment program has been set to succeed within such conditions and we remain confident that we will be able to achieve it," Hanover said.
Despite the Reserve Bank slashing interest rates, New Zealand property values have continued to fall and sales remain at historically low levels, it said. Hanover owes more than $550 million to about %16,400 investors who were due to receive 2% of their principal back on March 15 and to receive back 8% by the end of 2009. All interest accrued since July 1, 2008 was cancelled under the plan.
Hanover said it has had some success in having loans repaid and in refinancing others but has needed to initiate mortgagee sales in other cases, such as with the Five Mile development in Queenstown.
Newspaper stories about Hanover’s debt recovery issues are likely to continue but "these are not always accurate and we are often not given the opportunity to clarify factural inaccuracies or misconceptions before publication," the company said. It continues to work to achieve the best outcome for investors, it said.
As well as trying to recover loans, it has also aggressively cut its costs, halving staff numbers since July and moving to cheaper premises, it said.
Hanover has also appointed a new independent chairman, David Henry, to replace Greg Muir. Henry was formerly chief financial officer of Fisher & Paykel Industries before it was split into two separate whiteware and healthcare companies. Henry was a director of F&P’s finance company for 15 years.
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