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December 13, 2007 |
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FIVE STAR: Most Loans Outside Normal Lending Practice, PwC Says Majority of Five Star Consumer Finance Ltd.'s loans were made outside normal commercial lending practices, receivers Richard Agnew and Anthony Boswell, partners at PricewaterhouseCoopers, said in their latest update to investors. In a report in October, PwC noted that the company's loan book showed loans numbering 11,194 that aggregated NZ$65,520,000. According to the receivers, upon their appointment, they have commenced a thorough investigation of the records and activities of Five Star and its subsidiaries prior to receiverships. "We are conscious of not only what we have discovered in the loan book but also of a number of concerns raised by investors, among others," they said. "As a result of having analyzed each loan, we can confirm that many of the loans were made without security, or were made without satisfactory security," the receivers told the investors. The receivers assured the investors that any potential breaches of legislation that they have identified have been referred to the appropriate government authorities. The receivers intend to realize the value of the companies' loan books by continuing to operate the business while marketing the books for sale, a process that is currently underway. By marketing the books, they believe they can determine a better value can be extracted from a sale compared to the companies continuing in receivership, collecting the loans over time. Incorporated in 1988, Five Star Consumer Finance Limited is a wholly owned subsidiary of Antares Finance Holdings Ltd., owned by North Island shareholders. As reported by the Troubled Company Reporter-Asia Pacific on Aug. 31, 2007, Covenant Trustee Co. appointed Richard Agnew and Anthony Boswell, partners at PricewaterhouseCoopers, as receivers to Five Star and its subsidiaries. Five Star's board of directors sought the appointment because of serious concerns as to the state of the debenture market and the ability of the company to attract new funds and retain existing investments. The board, after consulting with the Five Star's auditors and advisers concluded that the company was unable to operate in this market. |
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