Geneva closing branches but staying open
Troubled finance company Geneva Finance is closing its branches and laying off staff, but said it would continue to lend through a direct lending centre and mobile managers.
Friday, October 26th 2007, 7:43PM
Geneva Finance, which defaulted on debenture repayments earlier this month, is seeking approval for a loan moratorium as it struggles with a lack of cash and tries to stabilise its position."We haven't collapsed," Geneva chief executive Riley said.
"We've shut our branches and we're moving to a different model. We're still there, we're still lending, not much has changed. . ." he said.
The move was consistent with the moratorium proposal and the need to build up cash reserves and cut costs.
"This is a challenging time for the whole industry, and all companies are reducing expenditure," he said in a statement.
Geneva had revised its business plan in September, and that included staff cuts and closures among its 21 retail branches.
Geneva's board and management, in consultation with its trustee, is holding a meeting for all investors on November 5 to request a moratorium on all investments until April 2008.
Earlier this month, Geneva, which mainly offers hire purchase for consumer goods and cars, personal and small business loans, said it had cut back the number of car dealers it dealt with, and admitted it was not lending at normal levels.
Rating agency Standard & Poor's has lowered its ratings on Geneva to the default-level D from B-minus, but trouble was signalled last month when S&P warned of a downgrade due to an increased likelihood of default.
The D rating is also used when a bankruptcy petition is filed.
Geneva is owned by Finance Investments Holdings, which in turn is half owned by three prominent Auckland property developers, Peter Francis, Gary Hitchcock and Nigel Burton.
If investors rejected the moratorium, Geneva said its trustee, Covenant Trustees, would proceed with enforcement action.
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