F&P Finance mulls future of Equipment Finance unit
F&P Finance mulls future of Equipment Finance unit after year of restructuring
By Jonathan Underhill
April 1 (BusinessDesk) - Fisher & Paykel
Finance, the finance company owned by China's Haier Group,
may transfer its Equipment Finance Ltd (EFL) unit to its
immediate parent in a further restructuring of the charging
group after changes including the start of a securitisation
programme last year.
The proposal to move EFL, whose receivables were valued at $25.9 million at Dec. 31, outside of the company's charging group is detailed in the prospectus for the sale of up to $300 million of secured deposits. The charging group is the company's non-bank deposit taker.
EFL, which offers finance for plant,
machinery and business equipment, has more than 13,000
business clients and partnerships with more than 250 diverse
equipment dealers in New Zealand, according to its
website.
Haier acquired F&P Finance as part of its
takeover of F&P Appliances in 2012. The Chinese manufacturer
opted to retain the finance company after initially
considering it for sale. In calendar 2014, following a
change of balance date, F&P Finance reported net interest
income of $35.5 million from $33.4 million in the
year-earlier nine months. Profit almost tripled to $31.8
million, helped by a revaluation gain on the transfer of a
subsidiary.
In 2014, a strategic review of the company
concluded it would benefit from a more diversified funding
base and restructuring. As a result, it established a
securitisation programme last August under which it made an
initial sale of $275 million of receivables from its Q Card
to Q Card Trust, owned by immediate parent F&P Finance
Holdings.
F&P Finance also 'sold' its Consumer
Insurance Services unit, which offers insurance and product
protection policies to retailers and consumers, to parent
F&P Finance Holdings for $20.1 million in December. The
charging group's software and intangible assets were also
sold to the parent for $7.3 million. And in a note on
post-balance date events, accounts payable and payroll
processing was transferred in the same way.
According
to the prospectus, the company's shareholder has approved
the release of EFL from the charging group provided it is
done by June 30 next year. It said the impact of the EFL
release on the business of the charging group "would depend
on a number of factors including the manner in which any
such EFL release is undertaken."
Company executives
weren't immediately available to comment on the
changes.
F&P Finance is rated BB+ by Standard &
Poor's, which is one notch below an investment grade rating.
S&P revised the outlook to negative from stable in December,
reflecting the potential for a downturn in the New Zealand
economy that could weigh on the financial services sector.
S&P said F&P Finance has a "concentrated product line
providing consumer card services to lower-to-middle
socio-economic clientele in New Zealand." Its main product
was its Q Card, a consumer card service with a network
spanning more than 10,000 retail outlets and more than
148,000 active customers.
The ratings company said
that "higher growth plans are in place for the company's
equipment leasing arm that should improve business
diversification over time." Equipment leasing made up about
15 percent of net receivables at Sept. 30 last
year.
(BusinessDesk)