Viaduct wants Govt guarantee back
Viaduct Capital, the finance company that was suspended from the government's deposit guarantee scheme, will reapply for the scheme and denies the Treasury's allegations of failing due diligence on certain loans.
Thursday, July 9th 2009, 9:27PM
by Paul McBeth
In an internal memo, the Treasury asserted Viaduct failed to comply with rules regarding related party lending and general business conduct by not undertaking due diligence on loans from Hunter Capital Group, which lent shareholder Phoenix Finance Holdings. money allowing it to buy the finance company, after it later engaged Hunter's owner Paul Bublitz to source lending opportunities.
The government department's memo also claims Viaduct provided false information, failed to provide information regarding transactions, and conducted transactions inconsistent with its prospectus.
Viaduct "strongly disagrees" with the allegations and "is presently investigating avenues to get the Crown guarantee reinstated, it said in an amendment to its prospectus, which it filed with the Companies Office on June 8. The amendment included Treasury's notes.
In the update, the company, which withdrew the prospectus last week, said the Treasury confirmed it was able to reapply for coverage under the guarantee, and while it intended to do so, "there is no way of knowing whether a reapplication will be successful."
Viaduct also said it "is reserving its right to challenge the Crown's decision."
The company initially launched its prospectus on March 3, and sought $50 million, but the Treasury rescinded the guarantee on April 20 on the basis that it may benefit "persons who are not intended to receive that benefit" and that it was inconsistent with the intentions of the scheme.
Paul is a staff writer for Good Returns based in Wellington.
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