GFNZ to revert to Geneva Finance

GFNZ Group plans to revert to its old name of Geneva Finance and carry out a seven-for-one consolidation to boost its share price.

One of the few finance companies to survive its moratorium and repay investors after a string of collapses that began in 2007, the company said key values associated with Geneva were "trust, integrity and (a) high level of consumer and market recognition." GFNZ said it was "the only large scale finance operation that successfully exited moratorium, paying its investors between 11-13% interest each month and repaying a total of $169 million (including $42 million of interest) to those investors."

While GFNZ managed its way through the fallout from the global financial crisis, other finance companies that had adopted names with a similarly European air of respectability, including Hanover Finance, Belgrave Finance, Chancery Finance and Lombard Finance failed. GFNZ said its reputation was also intact because it had maintained positive relationships with finance sector lenders and regulators.

Last week, the company posted a 61% gain in annual profit to $3.5 million, driven by its Geneva Financial Services unit, which built its loan book by 26% to $48.8 million. At the same time, it widened its margins, generating $5.8 million of net interest income, or 63.3%  of total interest income, compared to $3.4 million, or 52.7% of total interest income, a year earlier.

The company plans to consolidate its shares on issue to about 70.4 million from 493 million, lifting its share price to 41-42c from 6c.

"The board considers this will benefit all shareholders by moving the share price away from the sub 20c a share range and thereby enhance the credibility of the company with the markets," it said.

The company has set July 5 as the ex-date for the consolidation, with the shares going into a two-day trading halt. July 6 would be the record date for the consolidation and the shares would resume trading on July 7.

The name change and consolidation "reflect the board's confidence in the future of the company and its commitment to enhance and improve the company's relationship with key stakeholders for the benefit of all shareholders," managing director David O'Connell said.

GFNZ froze interest payments on its debenture stock in November 2007, when it owed some $132.4 million to investors. It slashed staff numbers and closed branches around the country as part of a survival plan that allowed the company to repay investors in full. The firm, which also operates insurance and debt collection services, specialises in car and personal loans of up to $50,000. It draws most of its funding from a securitisation facility with Westpac Banking Corp. That facility was reviewed in June last year and extended through to July 2017.

(BusinessDesk)