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Investors have thrown a lifeline to troubled investment company Geneva Finance.
A majority of shareholders have endorsed a recovery plan that will freeze all repayments until the end of next April.
Individually, mum and dad shareholders hold average investments of $30,000. However, the collective investments total nearly $97 million - a large chunk of the $140 million Geneva Finance is currently unable to service.
Geneva is the latest in a string of finance companies in strife and a majority vote against its suspension of repayments would have put the company into the hands of receivers.
"This action was taken as part of a prudent strategy to strengthen the business and protect all investors' interests ," says Geneva Finance CEO Shaun Riley.
But despite being part of the decision making process, investors had little choice but to back the self initiated rescue - a situation which New Zealand's consumer watchdog is unhappy about.
Consumers' Institute chief executive Sue Chetwin says investors did not have enough up to date information. She says documents provided by Geneva Finance only go up to March this year and they paint a rosy picture of the company when obviously quite a lot has transpired since then.
"We just think that people are going to that meeting today and not really understanding what they are being asked to do," says Chetwin.
Chetwin says investors have not been told that Geneva Finance will be closing 22 of its branches and that people have every reason to be concerned about the company despite what its directors are saying.
She says there is very little discussion in the documents about the possibility of a receivership and that investors need to see hard evidence Geneva can trade its way out of difficulty.
However, many investors coming out of the meeting were upbeat about the decision.
"It's either that or the receivers, and who wants to lose all your money next week?" says one investor.
Geneva Finance will not say what its plans are, but as 10 New
Zealand finance companies have gone into receivership in the last
18 months, plenty will be watching to see whether six months is
long enough to deliver the turnaround it needs.
