by Niko Kloeten
Independent chairman Nigel Smith told Good Returns the company would stop seeking debenture funding and would pay out current debenture holders in full at their end of their deposit terms.
Broadlands, which is owned by Tony Radisich, owes about $7.4 million to 258 investors, most of whom have relatively short (15 month) terms on their debentures.
As a result the amount outstanding will drop from $6.3 million in March next year to only $1.3 million in March 2013, with the final payment due in 2015.
Smith said the small size of the debenture book wasn't enough to justify the large regulatory and administrative costs.
The decision comes after Broadlands was unsuccessful in attracting interest from investors in New Zealand or Japan, where it also went looking for funding.
"It's costing us nigh-on a million dollars a year and it's just not economic. We've given it our absolute best to get a certain amount of money but just couldn't manage it.
"There's been a flight to banks. All the banks don't want to be banks but everyone who isn't a bank wants to be one."
Having to withdraw from the market was "gut-wrenching", he said.
"It's very sad because we certainly survived the crash, our good governance and management have got us through but no-one wants to invest in finance companies any more. The model is dead."
Smith said the lending and insurance sides of the company wouldn't be affected by the change. PetInsure, its insurance business for pets, is "going gangbusters," he added.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
| « Blue Star appoints replacement MD | Contact sets minimum interest on 30-year bonds at 8% » |
Special Offers
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved