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- Release Date: 03/04/14 18:40
- Summary: FORECAST: GFL: Geneva forecast profit downgrade
- Price Sensitive: No
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GFL
03/04/2014 16:40
FORECAST
REL: 1640 HRS GFNZ Group Limited
FORECAST: GFL: Geneva forecast profit downgrade
GENEVA FORECAST PROFIT DOWNGRADE
Geneva Board advise that following a review of expected cash flows from its
old business receivables ledger the company expects that it will need to take
up additional provisioning against these receivables. This, in combination
with, the relatively high recovery costs and high debt funding of this
business sector will result in the group incurring a loss of between $3.0m
and $4.0m in the March 2014 year. This estimate remains subject to the audit
of the March 14 accounts.
The downgrade in the cash flow forecasts from this old ledger are a
consequence of both changes in the collections environment, in particular
environmental factors affecting attachment order cash recoveries which now
comprises 59% of the cash recoveries from these receivables, and the nature
of the residual receivables.
To remedy the losses from this operating sector the board has approved plans
to reduce recovery costs and agreed that between $3.0m - $4.0m of the rights
issue proceeds (referred to below) will be used to recapitalise this entity
thereby reducing its debt funding costs.
It is expected that both the new business lending operation and the Group's
insurance operation will deliver profits in the year to March 14, however
these will be insufficient to offset the old business receivables losses
referred to above.
Recognising the negative impact of this situation on the Group the board have
called a shareholders meeting to approve a fully underwritten rights issue,
which if approved by shareholders will raise $6.1m of new equity. This action
will both offset the loss referred to above and further strengthen the
group's balance sheet. The main terms of the Rights Issue are:
o The Rights Issue is subject to the approval of the shareholders at a
meeting scheduled for the 29th April 2014.
o Shareholders are offered 11 new shares for every 18 shares.
o The Rights issue will be fully underwritten by Federal Pacific Group Ltd
o On this basis Geneva will issue up to 202,168,512 shares at 3.00 cents per
share, raising $6.065m of new equity.
o A copy of the rights issue prospectus will be available from both the
companies office website and the Geneva website.
The full information package will be mailed out to shareholders no later than
Thursday 10th April.
David O'Connell
GFNZ Group Limited
[email protected]
ALSO ANNOUNCED TODAY:
GENEVA FINANCE REGISTER PROSPECTUS TO RAISE $6.1M EQUITY IN FULLY
UNDERWRITTEN RIGHTS ISSUE.
Today, Geneva registered its Simplified Disclosure Prospectus for a eleven
for eighteen rights issue. Under this issue which will be at 3.00 cents per
share Geneva will generate $6.1m of new equity.
Geneva's major shareholder Federal Pacific Group Limited (Fedpac) has agreed
to fully underwrite this issue. Under the Takeovers Code and the NZX listing
rules both the rights issue and FedPac underwrite are subject to shareholder
approval which will be sought at a special general meeting to be held on 29
April 2014.
The main terms of the Rights Issue are:
o Shareholders are offered 11 new shares for every 18 shares held on the
record date, 4 April 2014.
o The Rights issue will be fully underwritten by Federal Pacific Group Ltd
o On this basis Geneva will issue up to 202,168,512 shares at 3.00 cents per
share, raising $6.065m of new equity.
o A copy of the rights issue prospectus is available from both the companies
office website and the Geneva website.
The full information package will be mailed out to shareholders no later than
Thursday 10th April.
David O'Connell
GFNZ Group Limited
[email protected]
End CA:00249104 For:GFL Type:FORECAST Time:2014-04-03 16:40:54
(20min delay)