Mascot stops accepting new money, but keeps doors open

Christchurch based property and consumer financier Mascot Finance has stopped taking new investments and is reviewing its operations, but has said it will continue to refund debentures as they mature and make interest payments. Mascot owed investors NZ$117.4 million as at March 31 and more than half of its loans are to residential investments or developments. As at March 31, it had 6 loans that were worth more than 60% of its equity, which stood at NZ$9.1 million. Its trustee is Perpetual Trust. Here is the full statement below from Mascot Chairman Brian Kreft.

The directors of Mascot Finance Limited ("Mascot") have been undertaking a review of the finance industry within which Mascot operates to determine the future position of Mascot in that sector. As part of that review, Mascot's directors have taken into consideration the current environment, the impact and the cost of impending increased legislative oversight, including the requirements for Mascot to obtain a credit rating. In addition, there is an absence of consistency of public investment, and in order to bridge the gap between the principally long term funding requirements of borrowers and the current short term focus of depositors, finance companies have a requirement to retain significant cash reserves. The Board is continuing its in-depth review of the future for Mascot and, once that review is completed, will advise all investors of the outcome. However, given that as at Friday 12 September 2008 Mascot held a significant cash reserve of $14.5 million, Mascot will not be seeking to renew any maturing debenture stock and deposits. Instead, Mascot will repay debenture stock and deposits as and when they become due. The Directors assure debenture holders and depositors that the current and projected cash reserves ensure that Mascot is in a position to meet all its obligations including the servicing of all interest and like payments, provided receivables continue to be repaid to the Company as projected. Mascot is therefore not seeking any further deposits at this time. However, it may transpire that the Company decides to seek funding from the public in the future and if this occurs, we would be pleased to receive your renewed support at that time. The Board is very grateful for the significant support given by all investors to the Company, particularly over the last year.