FMA orders Geneva to stop issuing securities
The Financial markets Authority has ordered Geneva Finance to stop borrowing from the public after learning the finance company breached lending covenants with Bank of Scotland.
The Financial markets Authority has ordered Geneva Finance to stop borrowing from the public after learning the finance company breached lending covenants with Bank of Scotland.
The FMA said it used new powers to make the interim order to “protect investors from being misled.”
The FMA said Geneva’s breach of its minimum new lending covenant meant the Bank of Scotland’s facility was repayable on demand.
In March the finance company's noteholders voted to swap their debt for shares in the company, raising $4.4 million for Geneva.
The plan was hatched after Geneva reached a deal with Bank of Scotland, which has been its main wholesale lender.
Bank of Scotland had agreed to cut its lending facility from $35 million to $30 million and to be fully repaid in March 2015 with payments every six months.
Geneva had drawn $24 million of that facility as at the end of March and continued raising money from the public through its registered prospectus, dated 12 May 2011.
“We believe our action is in the public interest because the prospectus relates to a continuous offer of debt securities. It is vital that existing and prospective investors have sufficient information about the company to make an informed assessment of their investments,” said FMA chief executive Sean Hughes.
“The interim order will prohibit any further allotment and so protect investors from being misled," he added.
“Our first use of this new stop order power is one means by which we can improve investor confidence in the accuracy of information presented to the market.”
The FMA said it was seeking further information from Geneva while it considered whether to order the offer documents to be corrected or cancelled “on the grounds that they are likely to deceive, mislead or confuse investors.”
NBR staff
Wed, 15 Jun 2011
Wed, 15 Jun 2011
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FMA orders Geneva to stop issuing securities
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