Another finance company shuts up shop
In a further sign of the times, finance company Savings & Loans has all but shut up shop, having repaid all its debenture holders last week and withdrawing its prospectus.
Tuesday, December 7th 2010, 11:31PM
by Jenny Ruth
The repayment included all principal and interest owing.
Managing director Scott Masters says his company has been watching developing events since finance companies started collapsing and the global financial crisis began.
"We're not sure what the market's going to do," Masters says. "We're just going to sit on the sidelines."
Savings & Loans, which specialises in providing residential mortgage second mortgages, will remain operational and intends to continue to comply with all the relevant regulations so it has the ability to raise funds from the public in future "just in case there's an opportunity in the market over the next couple of years. The market will change, as we all know," he says.
But in the meantime, trying to diversify funding sources beyond debentures has been extremely difficult, he says.
The small amount of lending it continues to do will be financed by its owner, the Boric family - director Milenko Boric is father of All Black Anthony Boric.
The company's sister company, Savings & Investments, will continue to operate.
The decision to repay investors comes hard on the heels of Equitable's directors to put it in receivership.
"We're lucky we're small enough that we have the ability to do what we've done," Masters says. "We've managed to survive the last few years by being conservative."
Savings & Loans latest accounts show it made losses in each of the last three years ending March 31, the latest loss being $223,891.
Its shareholder contributed a further $450,000 in equity in the latest year, taking total equity to $1.03 million against total assets of $5.6 million. That's down from $8.4 million at March 31, 2007.
It had $4.4 million in debenture stock at March 31, $2.2 million maturing before September 30 and a further $1.55 million maturing before March 31, 2011. It had been covered by the government's guarantee until October 12.
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