Major backing behind MFS Pacific and Boston Finance
Financial services and investment company MFS New Zealand Limited (NZX:MFN) ("MFS New Zealand") has today further
reinforced the difference between its finance company subsidiary MFS Pacific Finance Limited ("MFS Pacific"), and other
finance companies operating in New Zealand.
MFS Pacific focuses upon lending into the larger Australian property market and its structured finance team, loan
managers and Investment Committee are all located in Australia, and their focus and expertise is in Australian property.
MFS Pacific also has a legally binding agreement in place with MFS Limited called a 'Put Option' which means that if any
of MFS Pacific's loans have been in arrears for more than three months, or if any of its investments fall below the cost
MFS Pacific paid for them, MFS Pacific can require MFS Limited to purchase, for full value, that loan or asset. This
important feature is unmatched by MFS Pacific's competitors in the New Zealand market.
In addition to the Put Option, MFS Limited has confirmed to the directors of MFS Pacific and MFN that it will
financially support MFS Pacific in the event that this may be required.
MFS Limited is a large and diversified financial services, investment and tourism company that is currently listed in
the top 200 companies on the Australian Stock Exchange. MFS Limited recently announced a second successive record
full-year net profit after tax of AU$185 million in the 12 months ended 30 June 2007, net assets in excess of AU$1.53
billion and total assets under management of approximately AU$5.26 billion.
This year's profit announcement represents an increase of almost 90% from the net profit of AU$97.4 million achieved by
MFS Limited for the year ended 30 June 2006, and a significant increase to the net assets of less than AU$350 million a
year ago and assets under management of AU$2.9 billion for that same period.
MFS Limited has no exposure to the subprime lending markets in the US and over 55 per cent of its ongoing recurrent
earnings are derived from the company's direct investments in the tourism sector.
MFS New Zealand CEO Jason Maywald said that MFS Pacific enjoyed a level of financial support few other finance companies
could match in New Zealand
"The existence of the Put Option and the commitment of financial support from MFS Limited gives our investors comfort
that every dollar invested in MFS Pacific is protected by the size and strength of MFS Limited," he said.
MFS Limited also owns Boston Finance Limited ("Boston") which provides finance to the property sector, with all lending
secured by registered charges over real property. MFS Limited has also confirmed to the directors of Boston that it will
provide financial support to Boston in the event that it may be required.
Mr Maywald acknowledged that in the current climate investors were deeply concerned about the stability of the finance
company sector. "However, it is important that the distinction is made between finance companies with quality assets and
significant financial backing and resources and those that are susceptible to the volatility resulting from investors'
reaction to current market events."
"The confidence that investors in companies such as MFS Pacific and Boston have is that, as part of the wider MFS group
of companies, they enjoy a level of support that is unmatched by many other finance companies in New Zealand."
Mr Maywald also confirmed that the recent events within the finance company sector would not hamper MFS New Zealand from
continuing to pursue its strategy of developing its business into a substantial player in the New Zealand financial
services sector.
ends