Bruce Sheppard for the Hanover Finance board
Shareholders Association Chairman Bruce Sheppard has lashed out at the wrong target as far as the Hanover Finance debacle is concerned. In today’s Dominion Post he called Hanover Finance investors “dumb wits”, “idiots” and “stupid lunatics” for supporting the debt restructuring proposal. Sheppard should have directed his outburst against independent Chairman Greg Muir, PricewaterhouseCoopers, the Securities Commission and the company’s auditors. Maybe he is peeved because Hanover’s investors voted against him asking more than one question at Tuesday’s meeting. Investors voted in support of the debt restructuring because it was recommended by Muir and PricewaterhouseCoopers. It was also effectively endorsed by KordaMentha and the trustee, Guardian Trust. Investors usually comply with the recommendations of independent directors and their advisors while Hanover Finance investors were also attracted by the proposed repayment schedule shown below. No repayment programme was offered under the receivership alternative. Hanover Finance – Repayments under debt restructuring Annual Quarterly Year ending 31 December 2009 8c 2c Year ending 31 December 2010 10c 2.5c Year ending 31 December 2011 12c 3c Year ending 31 December 2012 35c 8.75c Year ending 31 December 2013 35c 8.75c Total 100c The important issue now is to keep the pressure on Muir - before he jumps ship – Mark Hotchin, Guardian Trust and the auditors KPMG to ensure that Hanover Finance meets its repayment obligations and adopts far better corporate governance and reporting standards. The appointment of two independent directors is important in this regard. Bruce Sheppard would be a great appointment because of his knowledge of the finance company sector and courage to stand up to Hotchin and Eric Watson. Sheppard would be ideal because the last thing that Hanover Finance investors need is two weak and compliant independent directors. The attraction as far as Sheppard is concerned is that he could call for a receivership after Hotchin and Watson had committed their $10 million but before the operating costs associated with the newly acquired Axis property group began to eat into investor returns.
(cents in $1)
In addition if Sheppard made a strong contribution to Hanover’s recoveries then the Shareholders Association should attract a large number of new members.
Brian Gaynor, 11 December 2008
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