Brian Gaynor reveals some eye-opening stuff about Nathans Finance. I too can tell some stories about this bunch of nefarious pricks.
Brian though details the various money-go-rounds that existed to feed money into the grinder that was VTL Group. he also explains about their nicking of a famous name but a little bit of subterfuge.
Essentially 97% of Nathans Finance lending was to related parties and worse they also capitalised the interest on those loans as well. It looks like John Hotchin has been learning well from his brother Mark over at Hanover as they also used this dodgy technique though not to the same extent.
Two of the most notable features of the Nathans Finance receivership are the dreadful state of its loan book and an anticipated repayment to secured debenture holders of just 10c or less in the dollar.
The accompanying table shows the book value assets and liabilities of Nathans Finance on the day PricewaterhouseCoopers (PWC) was appointed receivers.
A finance company borrows money from the public, mainly in the form of secured debentures, and should lend it to parties that have a strong business model with the ability to pay 100 per cent of the loans back.
According to Nathans Finance’s last prospectus it had “a robust credit assessment process” and provided “loans to a broad range of commercial entities”.
These comments were made even though, according to PWC, $170.8 million or 97 per cent of its total loans of $176.1 were to related parties, mainly VTL.
Where did the $162.3 million of loans to VTL Group, other VTL Group companies, master franchisee and franchisee in the accompanying table disappear to? What were they secured against?
At least as far as Hanover Finance and Bridgecorp are concerned there is land and developments in Queenstown, Matarangi and Fiji, but there is virtually nothing left at Nathans Finance. The company’s vaults are almost empty except for the stench of foul air.
Did VTL ever make a genuine profit? Did Nathans Finance lend money to master franchisees who then used this money to pay VTL and the listed company was able to report a big profit on this money go round? What did the master franchisees obtain from VTL in return for these payments?
There is nothing in the kitty as far as VTL is concerned as it now has virtually no assets and has negative shareholders’ funds of $135.3 million.
Someone has the hooter, it is up to the SFO to find it and slam these pricks into one of Judith’s new prisons.
