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F & P Finance departs govt guarantee scheme early

Fisher & Paykel Finance has decided to do without the government guarantee of its retail debentures more than six months before it has to.

Tuesday, June 28th 2011, 6:59AM

by Jenny Ruth

"We've determined that dependency on the Crown guarantee isn't required any more," says managing director Alastair Macfarlane.

The government's retail deposit guarantee scheme is due to expire on December 31.

The finance company, which is owned by the listed Fisher & Paykel Appliances, had liquidity of $205 million at March 31, enough to cover 146% of its debenture book. The company's debenture reinvestment rate is holding steady at about 60%.

The company has been discussing the issue for some time, Macfarlane says.

"Treasury are very pleased we're doing it. We just realised we don't need it."

One benefit of withdrawing from the scheme early is the company will avoid having a build up of deposits maturing on December 31, he says.

And the company wants its investors to look beyond the guarantee.

"It's an absolute makes sense decision for us and our investors."

The gruarantee has services its purpose in helping financial institutions through the global financial crisis, he says. The change has the full support of Fisher & Paykel Finance's banking syndicate.

Fisher & Paykel debentures already issued under the scheme remain covered by the guarantee.

Fisher & Paykel's decision is likely to put pressure on the other companies still in the scheme, Heartland Building Society, PGG Wrightson Finance which is in the process of being sold to Heartland and Wairarapa Building Society.

The latter's website says it stopped offering guaranteed securities from January 31 this year.

Fisher & Paykel's earnings before interest and tax for the year ended March 31 rose 20% to $34.7 million despite its gross receivables falling 2% to $628 million.

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