Dominion Finance investors exposed 

More than 100,000 mum and dad investors are now exposed to the finance industry meltdown after yet another company declared that it could not repay its lenders.
                    
Dominion Finance has become the twenty third finance company to either collapse or seek a moratorium in the past two years and it's blaming the global credit crunch.
             
Only last weekend, Dominion Finance used newspaper ads to solicit funds from investors. Now the company wants to suspend repayments.

Dominion Finance has been around for more than 50 years and has 12,000 investors.

It blames its cash flow problems on the international credit crisis but almost 70% of its funds are tied up in commercial and residential property developments.

"There's essentially a cash crunch. Can't pull the money out of the apartments, the property developments. Can't pay back the debenture holders as they come due," says Bernard Hickey, financial commentator.

Dominion's management are not talking but late last year they shrugged off the effects of the industry downturn.

"We didn't find a large impact on ourselves, if anything, there was almost a flight to quality towards the business," said Paul Cropp, Dominion Finance chief executive in May 2007.

Dominion adds to a growing list of industry problems. Seventeen finance companies have failed over the past two years, owing $1.6 billion to 66,000 investors.

Another six are involved in moratoriums, with $800 million owed to 27,000 people. Add in five frozen funds worth $800 million and all up the money now at risk is $3.2 billion owed to 108,000 investors.

Dominion's shareholders are also hurting. The company's share price has dropped 78%  over the past year.

"So this is a real blow for those people on the stock market who are hoping that some of the listed finance companies would trade on through," says Hickey.

The trustees of Dominion Finance will decide in around a fortnight whether to approve a moratorium.