Hanover Finance Restructuring Press Conference

Hanover Finance has announced the details of its NZ$96 capital restructure and delayed repayment proposal, including a previously foreshadowed NZ$96 million injection of property and cash by its owners Mark Hotchin and Eric Watson.

The proposal to be voted on by debenture holders on December 9 involves Hanover continuing to operate as a going concern, including a resumption of lending within 18 months and a drip feeding of capital repayments over the next 5 years. Hanover said it is assuming a recovery in the property market will allow it to recover loans to property developers over the next five years, which would return at least 18 cents in the dollar more than a receivership.

Hanover expects to restart capital repayments on March 15 next year, with 2 cents in the dollar every quarter returned in 2009, with a further 2.5 cents and 3 cents returned every quarter in the 2010 and 2011 years. The major capital returns are not due until 2012 and 2013, when the remaining 70% would be returned in two equal tranches of 35% in 2012 and 2013.

However, it said it had no plans to repay interest over the next five years, although it would restart interest payments if loan recoveries were greater than expected. However, dividend payments to shareholders would also resume at the same time.

Hanover currently has NZ$18 million in cash and is spending NZ$5 million a year on operating expenses. Hanover and its subsidiary United Finance owe 17,630 investors NZ$553 million.

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