Allan Hawkins defends prospectus
Allan Hawkins defends Cynotech prospectus and says he is willing to disclose historic fraud.
Tuesday, June 9th 2009, 6:00AM
by Paul McBeth
Allan Hawkins, the chairman and chief executive of Cynotech Holdings, says he's willing to addend the company's prospectus for the sale of $10 million of perpetual shares amid criticism it doesn't mention his historical fraud convictions.
"People know who I am - if it's a question of balance, we don't have any problem with disclosure." he told Good Returns. "We're one of the few finance companies still standing."
Hawkins says the finance, ice cream cone and satellite group took legal advice before publishing the prospectus for the perpetual shares, which pay 9.5% annual interest.
The $10 million will be used to bolster its Cynotech Finance Group, whose offerings include second mortgages, bridging finance, vehicle finance and commercial loans.
Hawkins was one of the high-fliers of the 1980s stock market boom in New Zealand as head of Equiticorp, whose so-called H-fee scheme funneled some $327 million through transactions designed to obscure its source. He was jailed for four years in the wake of Equiticorp's collapse.
He rejected media reports that Cynotech should also have disclosed details of a prosecution being taken by the Commerce Commission against the company's Budget Loans unit.
"The Commerce Commission won't tell us" the nature of its action, he said. Cynotech received a letter on May 18 from the regulator saying that it planned to proceed with a prosecution, without giving details, he said.
According to the Sunday Star-Times, the Commerce Commission alleges Budget Loans "charged unreasonable establishment and default fees" and "made misleading representations that it had the right to continue to charge interest and fees" on consumer items that had been repossessed and sold.
It also charged credit fees on loans that Budget Loans acquired from National Finance, contrary to disclosure statements made by National Finance, according to the newspaper report. The Commerce Commission didn't immediately provide a copy of the statement.
According to the prospectus and associated statements, Cynotech's capital securities are perpetual preferential shares aimed at "small retail depositors."
Paul is a staff writer for Good Returns based in Wellington.
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