$54m at risk as finance firm folds
Troubled finance company FE Investments has been put into receivership with $54.3 million worth of New Zealand investor deposits at risk.
The Financial Markets Authority’s director of regulation, Liam Mason, said: ‘‘This is terrible news for the investors in this troubled non-bank deposit taker ... FE Investments has been in difficulty for some time following a number of business setbacks. Its problems were not caused by
Covid-19, but there’s no doubt the current economic conditions have made matters worse.’’
Late last year, the company, which had $64m in term deposit investments from retail investors, told the Australian sharemarket that it may have to write down the value of major loans and was in a ‘‘vulnerable’’ position.
FE Investments had survived the global financial crisis, which saw the demise of many finance companies including Hanover, Bridgecorp Holdings and South Canterbury Finance.
However, international credit ratings agency Standard & Poor’s downgraded the company’s credit rating to CCC just before Christmas last year.
A CCC rating meant the business was ‘‘currently vulnerable to nonpayment and is dependent upon favourable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation’’, the agency said at the time.
The FMA said FE Investments managed $54.3m in retail investments from 617 investors, most based in New Zealand.
According to the company’s website, Neale Jackson and Brendon Gibson of KordaMentha
were appointed as joint receivers on April 1. ‘‘The receivers are now in control of the assets and undertaking of the company,’’ it said.
‘‘As a consequence of the receivership, all payments of principal and interest to deposit holders have been suspended.
‘‘The receivers will shortly write to all known deposit holders advising them of the receivership and the likely next steps.
‘‘Further communication with deposit holders will likely be in May 2020.’’
FE Investments is owned by FE Investments Group, which is listed on the ASX.
Mason said the FMA had been engaging with the company since late last year to ensure it was disclosing its situation accurately.
‘‘FE Investments has been in difficulty for some time following a number of business setbacks.’’
Liam Mason
FMA director of regulation