Share Investor: finance company collapses

Showing posts with label finance company collapses. Show all posts

Friday, March 25, 2011

Class Action Suit Against Finance Company Trustees: How to Register

New Zealand law firm Turner Hopkins, in conjunction with Australian law firm Slater Gordon, while not promising to return investors funds in collapsed finance companies, is however going to pursue some sort of justice by taking a class action suit against trustees of these finance companies, trustees whose job it was to keep a watchful eye on the day to day business activities of the directors and CEOs of these disgraced finance companies.

The trustees in finance companies such as Hanover, Capital & Merchant, Bridgecorp, Nathans and the like were trusted to have investors interests at heart first and that meant any irregularities would have to be looked at and investigated if need be. The majority of these trustees failed to adequately acquit themselves of their positions and in the absence of justice from the directors and CEOS of finance companies the trustees are the ideal candidates to now apply some heat to.

The following detail from the Turner Hopkins website explains in detail who is eligible to register to become part of the class action against these failed trustees. There will be no funds to pay to register or be part of the suit. I have no idea how it will be funded but it will and I am assuming that the respective law firms will be taking their cut at the end of a successful prosecution and so they should as it is admirable what they are trying to achieve.

Please see below for the detail of the class action suit and how to register to become part of it.

These claims will be in the form of representative proceedings on behalf of large groups of investors in one or more of the failed finance companies. The claims are expected to allege a breach of trust on the part of the corporate trustees appointed to monitor and supervise the activities of the failed finance companies and protect investors. Investors may well be entitled to recover economic losses incurred by them as a result.

Slater & Gordon are Australasia’s largest law practice and have decades of experience in class action and representative claims of this nature. They bring invaluable experience and expertise to this type of litigation. In particular Slater & Gordon have recently commenced a claim on behalf of investors against trustees of a failed finance company in Queensland and achieved an outstanding result for the investors.

Turner Hopkins has been working alongside Slater & Gordon for the past 12 months in analysing these potential claims. Being a specialist boutique practice situated in Auckland, Turner Hopkins’ partnership with Slater & Gordon provides the ideal mix of specialisation and experience to perform for the best interests of investors in a claim of this nature.

In addition we have secured the services and assistance of a highly experienced and skilled team of experts including one of Auckland’s most senior and well regarded Queen’s Counsel and accounting and financial specialists.

Funded Litigation

It is anticipated that the costs of bringing these claims will be met through litigation funding. This would mean that investors would not be required to make any payment at all for bringing this case. Nor would investors be exposed to any risk of adverse costs or other awards against them should the claim be unsuccessful. Funding arrangements of this type are relatively novel in New Zealand. We expect details of the funding arrangement to be available shortly.

Registration

We are currently seeking expressions of interest from investors who have sustained losses following the collapse of any of the New Zealand finance companies during the period between 2006 to 2009. If you were an investor and have lost money in one of those companies (regardless of whether it is now in liquidation, receivership or moratorium) we would be very pleased to receive your registration.

Registration will entitle you to receive directly from us regular updates on progress towards commencing these claims as well as information specifically relevant to the finance company/corporate trustee claim that may be available in your particular circumstances. We will also provide updates as to arrangements being made as to litigation funding arrangements that are being made. We look forward to hearing from you.

Recommended Fishpond Reading

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

c Share Investor 2011

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

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

c Share Investor 2007 & 2008

Friday, June 27, 2008

Accountability: It's such a lonely word

Accountability, a simple word, meaning basically taking responsibility for your actions or lack of or in this case having responsibility forced on you by means of law or by a third party.

The meaning of accountability though seems to have gone over the heads of those at the Institute of Chartered Accountants, when Bruce Arnold Mincham and Michael Derek Wood, directors at Queen St accountants O'Halloran HMT, were censured and ordered to pay costs of $133,347.18 over their involvement in the collapse of National Finance 2000.

Mincham and Wood breached some basic accountancy rules. They failed to report in writing to the Covenant Trustee Company of breaches to the trust deed and neglected to ascertain sufficiently, National Finance's claim that advances made to motor vehicle dealers were secured over the trading assets of the companies and by personal guarantees.

At the very least these two accountants should have been struck off as Chartered Accountants, for life.

At the upper end of the scale, striking off and a much larger fine would probably have been more appropriate. In this way the pair may have been able to have more sympathy for some of those small investors that lost their life savings with National Finance 2000, losses that were aided and abetted by the slackness and lack of care for their profession.

Small investors placed their faith in these accountants that the company they were doing the accounts for was operating in a safe and professional way and it was partially their responsibly to let the appropriate powers that be know that something was going wrong.

The Institute of Chartered Accountants, like the Real Estate Institute, Registered Master Builders Federation and others have always been backward when coming forward when it comes to censuring their members and the IOCA should be ashamed of their slap on the hand with a wet bus ticket attitude to their two highly tarnished members.

These two will only be the tip of the iceberg when it comes to the last two years and the 24 finance company collapses that have so far occurred. The IOCA decision could have been the start of something positive-responsibility for actions taken and a promise of more to come. Instead, with so far over 2 billion dollars at risk, zero people have been held to account, be they accountants, financial advisers or finance company directors.

This area of investing, like much of the investing and finance industry in New Zealand seems highly protected, incestuous and highly cosseted by those on the inside. Not on this blog though.

There appears to be at least one other finance company ready to do a belly flop next week, according to Leighton Smith this week on Newstalk ZB, and risks to even some of the bigger more respected ones also look to be growing.

Thursday, June 26, 2008

Kevin's Blog

I like the the photo of Kevin Podmore on his blog but am confused as to why there is no mention that the company was going to collapse less than one month after this relatively upbeat commentary.

The blog is 2 months old.

Kevin and his directors would have known the company was facing difficulties but just like other finance companies that have collapsed, St Laurence continued to borrow money from investors.

But it’s also good to see that even in the current environment where lending hasn’t prospered investors have benefited overall from the diversified business model that St Laurence has. Losses from the lending business have been more than offset in other areas and as a consequence our profit is just $2.1 million less than last year. We think its not a bad result.

Investors have benefited overall from diversification?

Kevin, come on! you knew this wasn't truthful when you wrote it didn't you?

What allowed to to risk investors money by continuing to borrow their money while all along knowing they were not going to get it back?

Was it greed, embarrassment, shame, what?

Be honest Kevin Podmore, why didnt you give investors in St Laurence fair warning months ago that their money was at risk?

That warning should have been on your blog somewhere.

I couldn't find it.

c Share Investor 2008

NZ Herald Feature:

Finance companies in freefall

22 May

Posted by Kevin at 10:10 am

We have just released our year end results and investors will have noticed a few changes this year. As well as increased underlying earnings, the main difference is the increase in loan provisioning.

In simple terms, a loan provision is an expense set aside as an allowance for doubtful loans in cases where the amount owed may not be fully collectable and/or delayed. Under the new NZ IFRS accounting standards, ‘general’ provisioning (of a set percentage of the loan book) has now been replaced with ‘specific’ provisioning against individual loans that are impaired.

IFRS requires a discounted cash flow (DCF) methodology for provisioning, a more accurate measure I believe which requires companies to assess the level and timing of future payments (both principal and interest) and discount those payments into today’s dollars.

I’d like to emphasise though that provisioning is not a write-off of the loan; it is an allowance against a company’s future ability to collect that loan in its entirety. Provisioning impacts on the current year’s profit rather than delaying the impact to future years’ earnings, but it also means that the closer the loan gets to its collection date, there is a recovery of the discounted value of that money.

Higher levels of provisioning shouldn’t be a surprise given the tighter market conditions - the banks have included billions of dollars of provisions in their recently announced results. As turmoil in global markets and the slowing of the US economy plays out, and the New Zealand economy slows due to tighter monetary policy and credit conditions, we are seeing a change in the credit cycle and I think our approach with regards to provisioning will stand us in good stead going forward.

But it’s also good to see that even in the current environment where lending hasn’t prospered investors have benefited overall from the diversified business model that St Laurence has. Losses from the lending business have been more than offset in other areas and as a consequence our profit is just $2.1 million less than last year. We think its not a bad result.

Check out more of Kevin's Blog here

Wednesday, October 17, 2007

Greed is Bad: Geneva Finance Folds

Geneva Finance, the latest New Zealand Finance company to go belly up has me slightly barking.

I say this because while directors and presumably trustees of the company have either been silent and or untruthful about matters unfolding over the last several weeks as their Standard and Poor's credit rating slipped from B+ to B- and now a D.

My first beef concerns the company and company trustee failing to adequately inform investors and prospective investors in the company, that the condition of the company was dire.

Investors and business media were repeatedly told by those in the know that Geneva was "doing fine" and they were able to trade themselves out of difficulties.

My take on the company at the this time was more negative than management and the writing really was on the wall when confusion reigned about a week ago when mainstream media were alerted to serious problems by a customer of Geneva that was told that they were not processing any further loans.

When questioned by several media about whether loans had been suspended it was at first denied then days latter validated.

Even at that point Geneva Finance was still taking deposits from investors and continued to do so until Monday, when the company announced they had defaulted on interest payments to investors.

My second beef comes to the point that directors of Geneva were accepting deposits from investors when they knew the company was in deep trouble.

Going further to this, the trustee, who is supposed to look out for investors when difficulties such as this arise has been strangely silent all this time.

Clearly the conduct of the directors of Geneva Finance and the Trustee has been less than adequate and serious questions put to them need to be answered.

The company is now going to ask investors in Geneva that they allow a moratorium be agreed to where the company will cease payments to investors for 6 months while they "restructure" the company.

Mr Riley said the plan would allow Geneva to stabilise its position, focus on negotiating a significant debt and equity transaction that would secure the long-term future of the company."

Shaun Riley, the chief executive stated:

The company had needed to "act quickly and prudently in the interests of our investors", he told Radio New Zealand.

"We're extremely confident that the period of the moratorium will be enough for us to put the company back into that stable position, secure that significant debt and equity transaction and really secure the long-term future of the company."

This is interesting language, it was also used over the last few weeks by the board to explain to investors that the company was doing OK.

Geneva Finance is owned by Finance Investments Holdings, which in turn is half owned by three Auckland property developers, Peter Francis, Gary Hitchcock and Nigel Burton.

As well as the 50 per cent holding, the trio own $7.1 million in preference shares, ranking above ordinary shares, and equivalent to another 35 per cent of the company's total capital.

Francis was a high profile "financier" in the 1980s and was chief executive of the failed Chase Corp, a top 10 company on the stock exchange in the mid-1980s which posted New Zealands biggest ever corporate loss before going belly up in the aftermath of the October 1987 crash.

Ironically it was only a day before the 20th anniversary of the crash that Geneva folded its tent.

Directors were not upfront with media and failed to fully inform investors in a prudent and sufficiently quick time frame.

The message is clear to me though.

It looks like management of Geneva Finance are simply trying to stave off the inevitable.

All the language and slack attitude of directors and the trustee points to this and directors so far haven't inspired the confidence in the market for us to think that they will come out with a positive conclusion in 6 months time.

Related Share Investor Reading

Hanover Finance: Hotchin Ponzi Scheme Suppression
Mark Hotchin Comes Out Swinging
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

Recommended Fishpond Reading

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

c Share Investor 2007

Friday, October 12, 2007

Share Investor's Friday Free for all: Edition 7

The Dominoes keep Falling

The week kicked off with yet another finance company meltdown.

Geneva Finance, definitely not Geneva based, stopped lending money to clients.

A few weeks ago there were warnings about this company and latter on this week its credit rating was dropped by Standard and Poor's from B+ to B-

Standard & Poor's defines a B- rated company as one able to meet its financial commitments but vulnerable to adverse business, financial or economic conditions, doesn't look good.

Meanwhile, Nelson finance company LDC and its 700 odd investors could get up to 90% of their funds returned, company liquidators have announced.

This is one of the better returns from the 10 finance companies that have collapsed over the last 18 months or so.

Bridgecorp investors, who between them risk losing up to half a billion kiwi dollars have decided to discuss the merits or otherwise of taking legal action against Bridgecorp and financial advisers who gave clients the thumbs up to plunge their bucks into this rotting corpse.

Finally, Hanover Group, one of New Zealand's biggest finance companies, seems in a huge hurry to quit an apartment building that it helped finance and that has got into difficulty.

Instead of flicking off the 92 units individually and getting more money back, they are forcing a mortgagee sale and risk getting roughly half the proceeds that they could.

The problem with the most recent finance company collapses has been liquidity and cash flow issues.

A Slap on the Back

http://www.charlottesistercities.org/SisterCities/Krefeld/KrefeldVisit2007/tabid/134/Default.aspx

The New Zealand franchisee of KFC, Pizza Hut and Starbucks, Restaurant Brands(RBD) this week announced a net profit of NZ $4.5 Million.

This is up nearly 100% on last year, as the company barely managed a positive result in 2006.

Revenue increased marginally on last year

Much has been made by management of the KFC "transformation" through store refurbishments but the head chickens at RBD still have a long way to go to get close to sales figures from its listed heyday.

Starbucks continues to plod on without contributing to the bottom line but Pizza Hut has slowed the downwards flow in sales for its round dough making stores.

I was expecting better and it doesn't look good for next years announcement in May.

The Power to Succeed

Another nail in the coffin for New Zealand's economy was rammed home this week when the climate change disciples from the Labour Party and Green Party announced that this country would no longer be able to build fossil fuel power stations for the next 10 years.

We are currently short of reliable power sources for a much needed expansion of our economy and today's announcement means that we now risk current industry and put the price of power to consumers and business up simply because worshipers at the climate change altar want to collect more taxes.

Business especially needs the surety of a sustained supply of electricity to allow expansion of their business and the confidence to invest.

Look for more manufacturers to head across foreign waters because of this decision.

Nuclear energy would be the answer to this problem if it actually existed but the n word will not be discussed by the Gore-ites in the Labour party.

NZX Market Wrap

The NZSX-50 index, down earlier in the day, rose 9 points to 4305.62. Turnover totalled $NZ95.9 million, with falls outnumbering rises 54 to 59.

Telecom (TEL) fell 6c to $4.44, while Fletcher Building(FBU) jumped 23c to $12.78, and Contact Energy (CEN) rose 22c to $9.57 in the wake of the Labour Government's new energy strategy released yesterday.

Fisher & Paykel Healthcare(FPH) was up a cent at $3.30 and its sister company Fisher & Paykel Appliances(FPA) up 5c at $3.70.

Sky TV (SKT) lost 5c to 570.

Among companies under M and A speculation, The Warehouse(WHS) was up 5c at $.548, casino company Sky City Entertainment(SKC) was even at $5.28, and Auckland Airport(AIA) climbed 3c to $3.10.

On the downside were Michael Hill(MHI),down another 14c to $11.26 following disappointing quarterly sales figures yesterday, and tech company Rakon (RAK) 12c lower at $4.80 in reaction to the higher currency.

Freightways (FRE) (POT) rose 5c to $7.10, Pumpkin Patch(PPL)was up 8c at $3.91,

Mainfreight(MFT) rose 5c to $7.05, Port of Tauranga(POT) gained 2c to $3.13, and Tourism

Holdings(THL) was up 4c at $2.31. The influential Fund Manager, Fisher Funds, from Auckland's

North Shore, sold down Freightways and purchased more Pumpkin Patch.

Infratil(IFT) fell 4c to $3.05, fish exporter Sanford(SAN) fell 3c to $4.27, Steel &

Tube(STU)lost 3c to $4.41, and Hallenstein Glasson(HLG) the clothing retailer was down 2c at $4.53.

NZ Dollar Wrap

Reuters currency rates (12.07.07) NZ Time
(5pm today 5pm yesterday)

NZ dlr/US dlr US77.02c US76.42c
NZ dlr/Aust dlr A85.52c A85.05c
NZ dlr/euro 0.5427 0.5398
NZ dlr/yen 90.41 89.62
NZ dlr/stg 37.89p 37.43p
NZ TWI 72.31 71.79
Australian dollar US90.07c US89.86c
Euro/US dollar 1.4192 1.4158
US dollar/yen 117.36 117.19

c Share Investor 2007

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

Share Investor