Related party loans to end at Pacific Retail
Pacific Retail Group says it is changing its policy in respect of related party loans by PRF.
Wednesday, November 24th 2004, 10:49PM
“No further loans will be made,” chairman Maurice Kidd says. “This policy is effective immediately and will be clearly spelled out in a new investment statement and prospectus amendment, due out soon.”
He says the new policy comes out of a decision earlier this year to review related party lending.
“It became clear to us throughout the half year that the financial services climate was changing. This was reinforced by various commentators and regulatory bodies looking at ways to assist investors in making better informed decisions.”
The issue of related party loans was one of the points raised in a recent Securities Commission paper on disclosure by finance companies.
Historically, PRF has seen the provision of related party loans as part of its business, albeit a relatively small part.
However, it was announced in May that the PRF loan in respect of PRG’s Powerhouse business would be repaid and this was completed in August, following PRG’s sale of its New Zealand appliance retail business. At the same time, Contract Managers advances made by PRF in respect of PRG’s former retail stores were also repaid.
Kidd says the two remaining related party loans on the books total $5.7 million.
The first was a five year loan to Receivables Acquisitions Pty Limited and is expected to be repaid in full within that period. The second, to PRP Airport Investments Limited, is due to be refinanced by a trading bank by the end of November.
Pacific Retail Finance issues of debenture stock used to fund the purchase of personal loans and hire purchase contracts. These personal loans and hire purchase contracts, making up 98% of PRF’s lending portfolio, are originated by PRF’s sister company Pacific Retail Services.
The finance group has just reported that its pre-tax profit for the six months to September 30 is up 160% to $14.6 million.
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