Geneva Finance's fate to be decided Friday

Share, debenture, and note holders will meet this Friday to decide the company's future and vote on whether or not to accept its proposal to defer repayments and gradually remove its $30 million facility with BOS over the next five years, managing director David O'Connell told investors in a letter.

"It is the board's opinion that if the plan is not approved by investors it is likely that the company will either enter into a management wind down or have a receiver appoint," O'Connell said. "Under the scenarios it is highly likely that the shares in Geneva will be worthless, and there is the likelihood that debenture holders and note holders will not receive all of their principal and/or all their interest."

In January, Geneva announced its future was uncertain after its wholesale funder warned it probably would not extend its $35 million facility with the finance company. The news prompted rating agency Standard & Poor's to cut the lender's rating from CCC to CC and put it on creditwatch negative, giving the finance company a 50:50 chance of a further downgrade. S&P has advised Geneva that if the plan is approved it will lower the rating to SD (selective default).

Still, if the plan is approved, BOS will agree to waive Geneva's two breaches of financial covenants permanently after saying it will wait until the outcome of this week's meetings before deciding whether to call in its loan.