- 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
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