Double hit for Hanover
UPDATED: Hanover Finance took a double hit yesterday with a ratings downgrade and news of a Commerce Commission investigation.
Friday, July 25th 2008, 6:55AM
It says that the changes follow the company's move to suspend interest and principal repayments.
Hanover is primarily funded by retail debentures and has been adversely affected by a slide in retail investor confidence in the finance company sector and, more recently, a decline in property prices. The company intends to propose a restructuring plan to its investors to give itself time to work through its problems "in an orderly way" and to "realise value from all borrowers", some of whom have been "trying to take advantage of the uncertainty (in global credit markets) to delay payments".
Fitch says that Hanover is not technically in default, but it expects that default will occur within seven days.
Meanwhile the Commerce Commission has taken the unusual step of announcing it has opened an investigation into Hanover Finance.
The investigation is into whether Hanover Finance has breached the Fair Trading Act by making misleading representations to prospective investors and/or the public generally.
It refused to give any further information on the investigation.
Hanover says it "will fully cooperate with any regulator when we know what the query is, and that we have stringent processes in place regarding all advertising."
| « Hanover hits standstill | Sovereign takes regulation bull by the horns » |
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