Federal Pacific takes stake in troubled Geneva Finance

Federal Pacific Group, a financial services group with ties to Ireland’s Fexco, has taken a cornerstone stake in GFNZ Group, formerly known as Geneva Finance, and arranged new funding lines for the automobile lender.

FedPac has taken 19.9 percent GFNZ, paying $1.2 million, or 2.75 cents apiece, for 45 million shares. That’s a premium of 112 percent to the current trading price of 1.3 cents per share. GFNZ will also make a pro-rata rights issue to shareholders at the same price.

The Auckland-based firm has also arranged additional funding lines to help grow GFNZ’s loan book and help refinance the company’s debt. GFNZ breached its banking facility covenants twice during the six months ended Sept. 30 when it narrowed its first-half loss to $264,000.

Managing director of Geneva Finance, David O’Connell, said in a statement that FebPac’s support will help the business “fast-track the new business model expansion” while keeping their scheduled debt repayment plan.

“Geneva is operating in a market that has seen many competitors fall away and we see the expansion of the profitable new business model into this space as key to putting the group on to a long-term and sustainable profitable platform.”

In March last year, Geneva Finance NZ convinced investors to swap debentures and notes in exchange for control of the company by trebling the shares at 5 cents a piece in its third capital reconstruction for the company.

The first was in November 2007 when note holders accepted a six-month moratorium as a better offer than winding up the lender.

The lender as been one of the more successful financiers to survive the sector’s collapse, and has repaid $121 million of debt and interest to investors. It owed $132.4 million to investors when it sought a moratorium four years ago.

FedPac operates money transfers, currency trading, investments and personal finance throughout the Pacific region. Kerry-based Fexco bought into the business in 2009 setting up a joint venture with Auckland’s Hutchison family who owned the business.