Showing posts with label Hanover Finance. Show all posts
Showing posts with label Hanover Finance. Show all posts

Friday, December 4, 2009

Hanover, Allied Farmers deal more of the same

So the Hanover Finance "rescue" package proposed by Allied Farmers has been given the big tick in an "independent report" by Grant Samuels . Well GS does reports on a number of companies and favour in its reports usually falls on the side of the party paying the cheque, so we can largely discount the GS report.

This is what it basically said though:

The Allied Farmers proposal is superior to the status quo and a high risk of receivership for Hanover Finance investors, according to Grant Samuel. NZ Herald

I happen to have an alternative view.

As I said back in November 2009 when Hanover proposed their moratorium, the best thing to do would have been to vote to wind the company up and get what you could get.

Hanover investors instead voted to give Eric Watson and his fellow fraudsters another chance and of course we now know that has blown up in investors faces just one year latter.

Investors in Hanover and United Finance, who Allied are also interested in buying, have the choice again to this time give directors at Allied a chance to get some money back on assets that are not likely to improve in value any time soon, in a property market that is uncertain at best or to simply bury their pride and vote to wind up the companies and get the best they can get at today's market rate.

I bet you Mark Hotchin's $35 million house in Paratei Drive that taking the money now rather than crossing your fingers for a recovery under future management will be the best bet.

Related Share Investor reading

Hanover's "White Knights" are really daylight robbers
Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

Related Amazon Reading

Resisting Corporate Corruption: Lessons in Practical Ethics from the Enron Wreckage (Conflicts and Trends in Business Ethics)
Resisting Corporate Corruption: Lessons in Practical Ethics from the Enron Wreckage (Conflicts and Trends in Business Ethics) by Stephen V. Arbogast
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c Share Investor 2009

Sunday, November 23, 2008

Hanover's "White Knights" are really daylight robbers

Some of the tripe written recently about how positive the "rescue package" that owners of Hanover Finance have put forward this week has me concerned because it presents a false picture of what is going on at Hanover now, and what has happened with the company in the past.

This from Phillip Macalister of Good Returns, a company that used to advertise on its websites and magazines for Hanover:

"It has been pretty open about its situation and its plans. That is a major plus." Phil's Blog, Nov 2008

When asked if he thought that the deal would silence all the critics he said: “I don’t think there’s any solution which would deliver that.”

The package being put forward though is designed to show that the “shareholders are standing up and supporting the business in its time of need.”

Also it makes sure that there is a future for the business. Good Returns, News Centre Sept 2008

Macalister contends that Hanover and its two top monkeys, Eric Watson and Mark Hotchin have been "pretty open" about the situation of the company but nothing could be further from the truth.

If one did just a little googling one could find a plethora of writing from credible investigative journos that would give lie to Phil's assertions. Unfortunately many of the 16000 investors in Hanover are of an age that they think googling might be related to self abuse rather than information that they would find illuminating about Hanover.

As far back as 2004, Deborah Hill Cone-ironically writing in a piece originally written for the National Business Review but reprinted in one of Macalister's websites-discovered there was trouble brewing for Hanover and its 16000 investors:

But if you want to write anything about Hanover Group itself ­ why it has more than $100 million tied up in related party loans, say, or why it lent money to the sad sacks signing up for conman Henry Kaye's seminars or even the seemingly simple question of why it doesn't file consolidated accounts ­ that's not considered quite so charming. Deborah Hill Cone, The Secretive Rise of the House of Hanover, Sharechat, March 2004

Just in the last two years alone the NZ Herald reports that $NZ86.5 million in dividends were creamed from Hanover and went to Watson and Hotchin:

Hanover Finance yesterday told the Herald that of $86.5 million in dividends it had paid out to Mr Watson and Mr Hotchin over the last two years, just over $70 million had been used by them or their companies to repay "related party" loans. Investigators swoop on Hanover, NZ Herald, July 2008.

But as Deborah wrote back in 2004, financial figures supplied by Watson and Hotchin for Hanover don't show the full picture because of the vast amount of inter-party lending and the complex nature in the way Hanover and its dozens of interrelated companies are structured is able to disguise inter-party lending so that Eric and Mark could even buy a super yacht with depositors money.

Why aren't accounts filed for Hanover that would show the consolidated picture for the whole group?

Karen Toner, one of the authors of KPMG's Financial Institution survey laughs when I say I'd like to see the consolidated figures for Hanover Group.

"Wouldn't we all? I think everyone in the industry would like to know that."

The group has a complex structure, with Hanover Group Holdings as the overall holding company and Elders Finance and Nationwide Finance subsidiaries of Hanover Financial Services. Elders is the parent company of subsidiaries United Finance, Leasing Solutions and FAI Finance.

Another finance company, Onesource Finance, is owned by Hanover Group, a separate subsidiary of Hanover Group Holdings. Deborah Hill Cone, The Secretive Rise of the House of Hanover, Sharechat, March 2004

Now the way Hanover was structured and its vast amount of inter party lending-that is lending that personally lined the pockets of Eric Watson and Mark Hotchin-may not be different from the 2 dozen or so finance companies that have done investors dough over the last two years but for Greg Muir, the outgoing chairman of Hanover, to come out today on behalf of the dastardly duo to make them look like white knights coming to the rescue of investors and they should all be grateful and in awe of their generosity has got to be the joke of the year:

"I can't talk about their personal motivations, I don't know what they are...all I can say is I think the shareholders have dug into their pockets as deeply as they feel they possibly can and this is the best result they can deliver." Hotchin told the Star-Times that shareholders had no obligation to put in more money but had done so because they wanted the company to keep going and repay investors. "I personally don't owe that money [to investors], neither does Eric, the company does, but we're pledging fresh money to help ensure they get back their principal. Hanover Duo Dig Deep, Sunday Star Times, Nov 2008

Morally, the principal duo do owe investors in Hanover because they extracted at least NZ$300 million from the company since 2001 and possibly as much as half a billion, which puts this weeks offer of $56 million of cash and dubiuos "assets" in some context.

The most recent publicly available Elders accounts, for the year to June 2003, show related party transactions of $93.5 million, up from $83.6 million in 2002, and $67.7 million in 2001. ShareChat, March 2004

Hanover Finance yesterday told the Herald that of $86.5 million in dividends it had paid out to Mr Watson and Mr Hotchin over the last two years. NZ Herald, July 2008

This easy money went to themselves and other "related parties" but hey according to Hotchin there is nothing personal about it, it is the Hanover business that owes 16000 investors more than half a billion bucks.

If you expect the same people to look after you in a restructure of the company, through their moratorium, that ran it into the ground in the first place then you need to take a good hard look at yourself.


Related Share Investor reading

Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

Related Links

From Stuff.co.nz

Hanover downgrade raises questions about credit ratings
Hanover Finance in troubled waters

Watchdog probes Hanover
Hanover et al, punt for the cash- Bruce Sheppard

NZ Herald on Hanover

Mark and Eric buy super yacht-TVNZ


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c Share Investor 2008







Thursday, July 24, 2008

Hanover Collapse: It was just a matter of time

In a post I wrote on October 5 , as part of the 2007 Friday Free for all series, I had the following story about the impact of Finance companies falling over. Hanover was picked as one of the dodgy ones.

If you were watching the TV over the last few weeks you would have noticed that the saturation advertising the Hanover was running had stopped. That is because they were insolvent.

This will not be the last one to go. All prospective investors in finance companies should be very wary about putting their hard earned dollars at risk.

Think seriously about not reinvesting if you already have money in this sector. Try a term deposit instead.


Financial Impact-from Share Investor's Friday Free for all: Edition 6

The fallout from the dodgy finance company industry rolls on again this week.

Hanover Finance, one of New Zealands biggest finance companies is to cut its Australian staff from 44 to 32.

Hanover has been busy re branding itself with an expensive advertising campaign as a warm , friendly, safe and solid industry player.

I'm still a little wary over this and other companies and their long term future in lending.

Even Hanover's size wont protect it from going under and there are rumours going around about its stability.

Even the State Kiwibank, the loss making division of NZ Post, has reportedly done 6 million taxpayer dollars in the Northern Rock collapse in the UK. One has to wonder why it was invested there.

Auckland-based investment firm Clegg & Co Finance has been placed in receivership this week. NZ $15 million of investors money is at risk.

On August 28 Brian Clegg, the director of Clegg and Co, wrote to investors written under a Classic Finance letterhead:

He writes about the publicity surrounding the collapse of finance companies, but believes his company is one of the "safe" ones, because it was "still operating profitably and successfully in accordance with our lending policy", and had kept out of high-risk lending.

In yet another collapse, investors in Five Star Consumer Finance heard today that they would expect to receive back 26c to 40c in the dollar on money invested but nothing forthcoming until December.


Related Share Investor reading

Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap

Share Investor Forum-Discuss this topic

Recommended Fishpond Reading

Crisis: One Central Bank Governor and the Global Financial Collapse

Buy The Intelligent Investor & more @ Fishpond.co.nz

Fishpond


c Share Investor 2007 & 2008


Friday, October 5, 2007

Share Investor's Friday Free for all: Edition 6

Sign O' the Times

Image result for auckland airport logo 2007


Monday morning I get an expensive looking flash black annual report in my mailbox from Auckland International Airport(AIA) and it comes festooned with the artistic equivalent of the anarchy symbol used by the punk rockers in the 70s and still used today by the wanna bees.

The logo is part of an expensive "re branding" exercise where the use of politically correct jargon and references to Maaoori and global warming are used liberally to suck up to just about anyone who is anyone, except if you are a shareholder.

This might give you some sort of idea:

Chairman John Maasland said the company has adopted a new vision of "representing our country, and new core values of being outstanding, uniquely Kiwi and welcoming".Do shareholders really need to shell out hundreds of thousands of dollars so AIA management can tell us what they will be doing but should have been doing all along anyway?

I have canvassed this sort of managerial mumbo jumbo before and it is nothing more than MBA spin, an exercise to make management feel better about themselves and submit an image to the public that is all surface and little substance.

Really an excuse for mediocrity.


Port in a Storm


Image result for port of tauranga logo 2007

In the wake of strikes this week at Ports of Auckland, POA, it seems owners of the now publicly owned port , Auckland Regional Holdings, ARH have refused to talk about the reasons why they put a buzz saw to the marriage between it and the Port of Tauranga (POT)

The Cameron Report, done by an investment banker, points to widespread efficiency gains from the tie up of the two ports. Efficiency gains would have resulted in more streamlined ports operations with bottom line benefits for customers.

Judith Bassett, ARH chair and ARC councillor has refused to release the report. Industry insiders say the possible gains were worth more than $50 million a year.

The Port of Tauranga is a much more efficient beast than POA and it seems jealousy over this and arguments that POT management wanted a bigger slice in the marriage because of their ports efficiencies may have sunk the merger.

As an outsider and ARC ratepayer myself one has to ask oneself what are ARC councillors hiding? It cant be good and clearly wont be released until after local elections in a week or so.

It probably wont be the end of port consolidation in the future between these two parties because it just makes financial sense to do so.

Ironically while POA's profit dived for 2007, POT's was up sharply.

Amazing what can happen to a company when it is abused by politicians.


Dow High?

The Dow hit an all time high this Tuesday (US Time), with the index up strongly by 191.92 points to close at 14,087.55.

It seems the banking and finance sector has made a comeback after the sub prime meltdown and all has been forgiven and forgotten as investors flocked to the sector.

The S&P 500 Financial Index rose 2.1 per cent, the biggest gain among 10 sector groups. Merrill Lynch, the third-largest securities firm, leaped US$2.59 to US$73.87. JPMorgan Chase, the third-biggest US bank, rose US99c to US$46.81.

Doubts still remain over how the "credit crunch" will really impact this sector as the bulk of "sweetheart" mortgage deals in the sub prime area that caused the meltdown, where lenders have a lead-in low interest rate on their mortgages for 6 months or so , have yet to fully hit the market.

Keep watching, I will!


Its a Mans World, Baby

Much fuss made in mainstream media circles this week over the apparent dearth of women CEO's running companies in New Zealand.

This in the wake of Di Humphries' decision to leave the top job at Glassons, a division of the clothing retailer Hallensteins (HLG)

Names such as Vicki Salmon, former head of Restaurant Brands(RBD) and Teresa Gattung, former head girl at Telecom New Zealand (TEL) were bandied about as examples to be admired.

Sadly these two were both monumental failures at their respective positions.

Gee, how about company heads being picked because they are good at what they do, if they happen to be men or women it doesn't matter, as long as you have the best person for the job.

Call me simple but I am just a man.

Humphries' is off to look after her young family. A very important job, if I do say so.


Financial Impact

The fallout from the dodgy finance company industry rolls on again this week.

Hanover Finance, one of New Zealand's biggest finance companies is to cut its Australian staff from 44 to 32.

Hanover has been busy rebranding itself with an expensive advertising campaign as a warm , friendly, safe and solid industry player.

I'm still a little wary over this and other companies and their long term future in lending.

Even Hanover's size wont protect it from going under and there are rumours going around about its stability.

Even the State Kiwibank, the loss making division of NZ Post, has reportedly done 6 million taxpayer dollars in the Northern Rock collapse in the UK. One has to wonder why it was invested there.

Auckland-based investment firm Clegg & Co Finance has been placed in receivership this week. NZ $15 million of investors money is at risk.

On August 28 Brian Clegg, the director of Clegg and Co, wrote to investors written under a Classic Finance letterhead:


He writes about the publicity surrounding the collapse of finance companies, but believes his company is one of the "safe" ones, because it was "still operating profitably and successfully in accordance with our lending policy", and had kept out of high-risk lending.

In yet another collapse, investors in Five Star Consumer Finance heard today that they would expect to receive back 26c to 40c in the dollar on money invested but nothing forthcoming until December.


Ladies and Gents, please place your Bets

By Reuters | 05 Oct 2007 | 12:39 AM ET with comments by Share Investor

New Zealand casino operator Sky City Entertainment Group(SKC) sees the possibility of more than one bid, as a potential buyer looks at its books over a deal that could be worth around 1.9 billion.


Executive Director Elmar Toime told Reuters on Friday that the unnamed bidder's decision to conduct due diligence could spark other bids.

"The interest is there, whether the timing is right, or people have the wherewithal is the great unknown," Toime said.

Sky City, which has a virtual monopoly on casinos in New Zealand and also operates in Australia, has been actively seeking buyers since receiving the approach in late September.

Earlier on Friday, the Australian Financial Review newspaper said private equity group TPG was the favourite to take over Sky City after another private equity firm rumoured to be interested, New York-based Providence Equity Partners, did not make a bid.

Australian competitors of Sky include Tabcorp Holdings, Tattersalls and Publishing and Broadcasting Limited. Tabcorp and Tattersalls have said they are not interested.

Shares in Sky City last traded unchanged at NZ$5.36, having gained 9.2% so far this year, compared to a 5.5% gain for the benchmark top 50 index.

Toime would not give the identity of the unnamed bidder, but said it was due to complete its due diligence on Sky City by the end of October. He also declined to comment on the Australian 

Financial Review article

Private equity and Asian gambling operators have been touted as the most likely source of bids.
The sector in New Zealand is tightly regulated, and Toime said he was unsure if a bid by a foreign party to takeover Sky City would attract political or regulatory opposition.

Citigroup has said in a report that recent Australasian casino deals had an average enterprise value to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio of around 10 times.

That would indicate a private equity bidder paying about NZ$5.60 a share for Sky, valuing the company at $1.9 billion, said Citigroup analyst Andy Bowley.

In May, Sky City unveiled a programme to cut NZ$33 million in costs over 18 months, and said it might sell its Adelaide casino in Australia and one in Christchurch, as well as its cinema business.

Toime said indicative bids for the cinema business were expected by the end of October.

As I have said before, I wouldn't be willing to sell my SKC holding for anything like $NZ 5.60.

It is worth a substantial premium for control and an offer of $5.60 would be quickly rejected by shareholders.


NZX Market Wrap

New Zealand shares dipped today in light trading at the end of a quiet week.

The NZSX-50 index, which yesterday lost 0.6 per cent, was down 15.93 points or 0.4 per cent at 4284.05. Turnover was an unimpressive $NZ109.7 million, and falls outnumbered rises 53 to 35.

Top stock Telecom(TEL) which returned $1.1 billion to shareholders today and cancelled one share in nine, fell a cent to $4.56.

Sky City(SKC) rose 3c to 539. The Australian Financial Review said today that private equity group TPG was in the lead to buy the casino operator after Providence Equity Partners disclosed that they hadn't made a bid.

Fletcher Building(FBU) fell 31c to $12.20, continuing its pattern of large moves in either direction.

Contact Energy(CEN) was steady at $9.35 after dipping yesterday due to indirect regulatory scares, Fisher & Paykel Healthcare(FPH) was up 7c at $3.34, F&P Appliances(FPA)rose 2c to $3.55, and Auckland International Airport(AIA) dropped 3c to $3.09.


Among other stocks to go south today, The Warehouse(WHS) lost 7c to $5.37, Ebos (EBO)was down 11c at $5.04, Air New Zealand(AIR) lost 2c to $2.36, and Rakon(RAK) was down 4c at $4.80. Pumpkin Patch(PPL) fell 5c to $3.05 today and has continued to spiral downwards over the last few weeks due to US dollar weakness. Hallenstein Glasson(HLG) was down 6c at $4.50.

Guinness Peat Group(GPG) was up 2c to $1.95, Port of Tauranga(POT) gained a cent to $6.96.

Dual-listed stocks posted bigger gains, with ANZ up 40c at $35.90, Lion Nathan(LNN) up 20c at $10.95.

NZ Refining(NZR) was down 9c to $7.81 on lower oil prices and refining margins.

Disclosure  I own SKC and AIA shares






c Share Investor 2007