Founder moves aside
THE FOUNDER of Asset Finance, which was stopped by the Financial Markets Authority from raising debenture investments in May, has stepped down to smooth the way to issuing a prospectus.
Clive George, who built the company up from its early days as the Whakatane Spare Parts Warehouse, has resigned from the board, but chairman Bryan Heapy said George will remain on staff.
Asset Finance is one of a handful of debenture-funded firms that survived the financecompany collapses of 2006-10.
While never a large finance company – it peaked with gross loans of just under $25 million in 2006 compared with $17m in March this year – it was highly visible and popular with debenture-holders for the high level of interest it paid.
Heapy said George stepped down after an investigation by the FMA: ‘‘Clive had personal activities outside of Asset Finance and one of these was brought into question.’’
Heapy said the investigation had found no wrongdoing.
‘‘Clive thought it would be in the best interests of Asset Finance to resign.’’
Heapy, who said he felt the grounds for the FMA investigation probe were ‘‘pathetic’’, hoped to have a prospectus registered early this week.
He said George would no longer have any part in the management of Asset Finance. George’s son, Blair George, had taken over as chief executive and, in time, could be invited to join the board.
In April, the FMA issued an interim order prohibiting the allotment of securities to the public by Asset Finance, concerned that Asset Finance’s prospectus did not reveal exactly who is making repayments on one of its loans.
The loan was to a company called Rexon Ltd, which was put into liquidation in April 2009, but though an amendment to Asset Finance’s prospectus showed ‘‘regular payments’’ made every month to reduce the principal, it did not reveal that the loan repayments were being made by a trust associated with George.
Heapy said Asset Finance had conservative lending practices and plenty of liquidity. He said many loyal investors who had been unable to reinvest their debenture money in the absence of a prospectus had left their money in a solicitor’s trust account and would be given the option, once the prospectus was out, to reinvest in Asset Finance.
As well as the change to the board there have been changes to the debenture trust deeds, which include giving the trustee powers to appoint independent experts, demand reports from the board and also governing the relationship of Asset Finance with its auditors.
The trust deed specifically requires that the auditor can meet with the trustee without the Asset Finance representatives being present, that the auditor reports separately to the trustee, and that no-one from Asset Finance will ‘‘attempt to prevent a person or persons who have resigned from appointment as the auditors, or declined to accept appointment or reappointment as auditors, from offering an explanation, or disclosing to the trustee the reason, for resigning or declining appointment or reappointment’’.