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Provincial Finance Receivers Update Investors

Friday 14 December 2007


Provincial Finance Receivers Update Investors


The receivers of Provincial Finance Limited (“Provincial”), John Waller and Maurice Noone, partners at PricewaterhouseCoopers, have advised secured debenture holders that a further 7.5 cents in the dollar repayment of principal will be made on 19 December 2007.

This will be the sixth pro-rata principal repayment, bringing the total amount of principal repaid to investors over the past 19 months to 72.5 cents in the dollar. The total cash repaid to secured debenture holders to date is $214 million.
“Our recoveries from outstanding loans continue to proceed very well,” said receiver Maurice Noone. “Most commercial loans are now all repaid in full and many of the 28,000 consumer loans are winding down or have been paid in full.”

However, he cautioned that while quarterly repayments have been possible up until now, as time went by it would become increasingly difficult to maintain meaningful quarterly distributions. “As the loan books continue to wind down, cash collections will reduce. This will impact both the size and frequency of future distributions. That said, another payment is scheduled for March 2008.”

The receivers had been in discussions with parties in respect of a possible restructure or sale of Provincial. However, the recent volatility in the finance company sector had seen the withdrawal of this interest.

As a result of the current environment, Mr Noone said that rather than a sale, returns to investors were likely to be maximised through an ongoing and orderly receivership process. He said expressions of interest received from potential purchasers to date had fallen well short of the returns expected to be generated from the continued collection of finance receivables.

Litigation continues against a number of parties where the receivers believe a series of alleged frauds have been committed. As these are before the court, no further comment can be made at this stage. Mr Noone reiterated that while a successful outcome will generate funds for distribution to secured debenture holders, the amounts involved will not have a material impact.
-ends-

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