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Strategic Finance Announces Moratorium Proposal

Fuseworks Media
Fuseworks Media
Strategic Finance Announces Moratorium Proposal

2 December 2008 - Strategic Finance has reached agreement with Perpetual Trust Limited and BOS International (Australia) Limited (BOSIAL), its financier on the terms of the moratorium proposal to be voted on by stockholders, deposit holders and subordinated note holders in Wellington on 22 December. Based on documentation requirements, this was the earliest possible date available open to Strategic Finance to ensure the meetings were held this year.

Under the moratorium plan, Strategic Finance will, subject to the availability of funds as the assets of Strategic Finance are realised, make quarterly repayments of principal and interest through to December 2013, to its stockholders, deposit holders and subordinated note holders, in accordance with existing priority arrangements, as the assets of Strategic Finance are realised.

The directors of Strategic Finance believe that, in the context of the current circumstances, the moratorium is the best way forward and that it will result in higher repayments to all security holders than would be available in a receivership. The aim of Strategic Finance is to repay all principal and pay accrued interest to stockholders, deposit holders and subordinated note holders over the course of the moratorium period. However, the ultimate outcome of the moratorium and the amount and timing of payments to securityholders will depend on the successful realisation of Strategic Finance's assets.

Under the moratorium proposal, interest on investments will be re-set at 7 August 2008 to 8.0% across the board for all securityholders, including BOSIAL for its main bank facility (interest that accrues on the prior ranking BOSIAL facilities of $25 million will continue to accrue at the existing ordinary rate).

It is anticipated that PricewaterhouseCoopers will be appointed as the monitoring accountant during the moratorium and will monitor Strategic Finance's compliance with the terms of the moratorium.

The moratorium proposal allows Strategic Finance the opportunity to work with borrowers, realising assets on an orderly basis to ensure value is preserved and investor money is repaid if and when funds are available.

The moratorium is not subject to the approval of the perpetual preference shareholders. No changes are proposed to the terms of issue the perpetual preference shares under the moratorium. However, if the moratorium proposal is approved then it is intended that a dividend cancellation notice will be issued cancelling all future dividends on the perpetual preference shares until the end of the moratorium and Strategic Finance has been able to fully repay the prior ranking stockholders, deposit holders and subordinated noteholders.

The moratorium notice of meetings and explanatory memorandum (including an independent report on the moratorium proposal from PricewaterhouseCoopers) will be posted at the end of this week to all investors. As well a copy of a short form prospectus, containing information on Strategic Finance's financial position as at 30 June 2008, will be sent separately to all investors prior to the meetings.

The management of Strategic Finance will be undertaking presentations throughout the country to explain the moratorium proposal to investors. Dates and location details will be sent out to investors with the documents and will also be available on the Strategic website

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