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Provincial Finance Placed In Receivership

Media Release from Perpetual Trust Limited

Friday 2 June 2006


Provincial Finance Limited and Subsidiaries Placed In Receivership

Consumer Credit Limited (In Receivership)
South Auckland Cars Limited (In Receivership)
Together with Provincial Finance Limited (In Receivership) (“Provincial”)

Perpetual Trust Limited, trustee for the debenture stock issued by Provincial Finance Limited, has placed Provincial in receivership. John Waller and Maurice Noone, partners at PricewaterhouseCoopers, have been appointed as Receivers.

“Early in April it became apparent that Provincial had breached certain covenants and ratios in its Trust Deed,” said Peter Baynes, Chief Executive of Perpetual Trust. “The Trustee was also concerned at the adequacy of Provincial’s provision for doubtful debts.

“On 13 April we wrote to Provincial requiring those breaches to be remedied. We also formally requested the company’s auditors, Ernst & Young, confirm the appropriate provision for bad and doubtful debts at 31 March 2006.

“A few days later, we formally advised the Registrar of Companies that we believed Provincial was in serious financial difficulties.

“Over the period since then, Provincial’s shareholders have made strenuous efforts to address the problems but we have formed the view that the best course to protect the interests of the debenture stock holders, who have invested some $300 million with Provincial and whose interests we represent, is to place Provincial into receivership.

“Provincial’s shareholders, together with the Trustee and Receivers are in discussions with external parties about a recapitalisation of Provincial.

“The Receivers have secured the assets of Provincial and are in the process of determining the financial position while the potential recapitalisation plan is explored. Given the size of Provincial and the number of loans, this could take some time. The Receivers will prepare and send a report to investors on their initial findings of Provincial’s financial position as soon as possible,” Mr Baynes concluded.

ENDS

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