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Frequently Asked Questions

Hanover Finance Companies Distribution

Final Distribution Deadline 16 February 2018 

There are still a significant number of eligible investors who have either returned incomplete information to us or are yet to make a claim.  These eligible investors will receive another letter shortly requesting information. All supporting information must be submitted by 16 February 2018.

We anticipate making a final distribution to the remaining eligible investors in mid to late March 2018.  The date of the final distribution will be confirmed closer to the time.

Investors who returned information to us, but after rechecking the data are still not eligible for a share of the settlement sum based on the FMA entitlement criteria, will receive a letter from us shortly to confirm their individual position.

If you have any inquiries about the distribution process, please contact Ben Colwell on 04 470 3789 or email nzhanover@deloitte.co.nz

 

Tracing eligible investors

The distribution programme to eligible investors is drawing to a conclusion.  There are still some eligible investors who have moved, gone no address or have not contacted the Deloitte team.  Credit Consultants have been engaged to locate these eligible investors.  If you get a call from the Credit Consultants team in regard to your Hanover investment, this is simply about attempting to make contact.  Credit Consultants will then securely put you in touch with the Deloitte distribution team so we can undertake verification checks.

What is the “Settlement Sum”?

The settlement sum is the $18 million that has been paid as part of a settlement of the civil proceedings commenced by the FMA against the former directors of the Hanover Finance Companies and against the former directors of Hanover Group Limited for alleged breaches of the Securities Act.

What is the “Relevant Period”?

The relevant period is the period from 7 December 2007 (the date of distribution of the 2007 prospectus) to 23 July 2008 (the date of the moratorium).  Only those investors who invested or reinvested with any of the three Hanover Finance Companies in the relevant period, and who have not been repaid in full, will be eligible to receive a share of the settlement sum.

Who is an “Eligible Investor”?

An eligible investor is anyone who invested, or reinvested, in one (or more) of the Hanover Finance Companies during the relevant period from 7 December 2007 to the 23 July 2008 moratorium and who was not repaid in full.

The pro rata distribution of the $18 million settlement sum will only relate to the value of each investor’s investments (or reinvestments) made in the relevant period.

Investments made in earlier periods (prior to 7 December 2007), which were due to be repaid after 23 July 2008, will not qualify to receive any part of the settlement. 

Who is not "Eligible"?

Any investor that subscribed for debt securities in the Hanover Finance Companies before 7 December 2007 (and whose investment did not mature in the relevant period) is not eligible.

Any defendant to the proceeding who subscribed during the relevant period is also not entitled to any payment.

For the avoidance of doubt, an eligible investor also does not include anyone who may have subscribed for debt securities in the relevant period, but then fully redeemed this same investment during the relevant period.  These investors have already been fully repaid.

What are the “Hanover Finance Companies”?

The Hanover Finance Companies covered in this settlement only include Hanover Finance Limited, United Finance Limited and Hanover Capital Limited.

Will I be notified if I am receiving a distribution?

Yes.  Deloitte has been engaged by the FMA to design, manage and oversee the distribution.  Deloitte will shortly write to every investor who invested in the Hanover Finance Companies and who was still an investor as at 23 July 2008 (investor confirmation letter).  The investor confirmation letter will advise whether, based on Hanover's data, the investor is eligible to receive a pro rata share of the settlement sum. It will also set out Deloitte’s assessment of the investments held in the respective Hanover Finance Companies (based on Hanover's records) and which of these investments create an entitlement to share in the settlement sum.  If the Hanover data recorded in the letter is incorrect, then you should provide corrected information to Deloitte so that we can check and, if appropriate, amend your details.

Currently, Deloitte is reviewing the Hanover records and assessing each investor's eligibility to receive a payment. 

What do I need to do if I consider myself eligible?

At this early stage, we recommend that investors simply collate their investment information (see the check list below), and await the investor confirmation letter. If your contact details have changed since 2008, then you should provide your new contact details to Deloitte (see below).  You do not need to send in any information about your investment to Deloitte at this stage. You will be advised by Deloitte, in the investor confirmation letter, what information you need to provide. Investors should receive this letter by mid-August. 

Once you have received the investor confirmation letter, please check the details of your investment. You will also be able to use the dedicated toll free 0800 number, email address and postal address to update your details (such as contact address and bank account numbers).

Deloitte will also ensure all investors are kept up to date with the status of the distribution process.  A designated website www.deloitte.com/nz/hanover has been established where regular updates on the steps in the distribution process will be posted. 

What should I do if my address and/or bank account has changed since July 2008?

Please immediately send a written request to Hanover Finance Companies Distribution, C/- Deloitte, PO Box 1990, Wellington 6140, to have your details updated.  Please ensure this request includes both your current and prior details, investor ID number, your IRD number and the investor’s signature. Deloitte will then update your details.

What do I do if I’m the executor of an estate or have power of attorney?

In order to update an investor’s contact details to the executor of their estate or attorney, we will require the following information:

  • A copy of the probate; or
  • A copy of the enduring power of attorney;

AND

  • The new address for correspondence;
  • The investor’s address in July 2008;
  • The investor’s IRD number.

This information can be sent by email to nzhanover@deloitte.co.nz, or by post to Hanover Finance Companies Distribution, C/- Deloitte, PO Box 1990, Wellington 6140.

How is the distribution to be calculated?

We are using a fair and reasonable mechanism to calculate the pro rata distribution of the settlement for each eligible investor. The amount to be paid to each eligible investor will be calculated applying the net exchange value that was applied to each class of investor when they accepted the Allied Farmers Limited debt for equity swap transaction in 2009 to determine the apportionment of the settlement sum to each of the three eligible  investor groups. The eligible investor groups and net exchange values are summarised below:

 

Face Value

Interim
Distribution

Release

Net Exchange

Hanover Finance Limited Secured Depositors

100 cents

Less 6 cents

Less 22 cents

= 72 cents

United Finance Limited Secured Stockholders

100 cents

Less 6 cents

Less 10 cents

= 84 cents

Hanover Capital Limited Bondholders

100 cents

Nil

Less 70 cents

= 30 cents

Source: Explanatory Memorandum and Notices of Meeting, November 2009

Please note, at this stage, we are not aware of any investments having been made by Hanover Finance Limited subordinated noteholders in the relevant period. If this is correct (which we are in the process of checking) investors in Hanover Finance Limited subordinated notes will not be eligible for a payment.

Details and specific examples of how this calculation will apply to all investors, as well as an indicative distribution amount for each class of investment, will be provided in due course once the investor data from Hanover has been collected and analysed by Deloitte.

What is the estimated distribution to “Eligible Investors”?

Based on the current data that has been secured from Hanover, and applying the net exchange value apportionment described above, the cents in the dollar share for each eligible investment to each investor group is as follows:

Eligible Investors

Final Distribution

Hanover Finance Limited Secured Depositors

16 cents in the dollar

United Finance Limited Secured Stockholders

19 cents in the dollar

Hanover Capital Limited Bondholders

6.5 cents in the dollar


This is a cents in the dollar calculation for each eligible investor based on a preliminary estimate of the total eligible amount for investors in each group as at 23 July 2008.  It is still subject to verification and validation, therefore it is a preliminary estimate only.  

Please note that the eligible amount under this distribution may differ to an eligible investor's total outstanding investments in the Hanover Finance Companies depending on the dates in which each investment was made.

The Settlement Sum was paid to Deloitte on 30 June 2015 and is being held in an interest bearing account while the distribution process described in this document is completed.  The cost of distribution will be deducted from the Settlement Sum.  We expect that the interest earned from time of receipt until distribution will largely off-set the cost of distribution.

When will I receive my distribution?

At this stage the first priority is to assess and validate the Hanover records to determine the eligible investors.  This stage includes Deloitte contacting all eligible investors to verify the accuracy of the Hanover investment data. As described above, Deloitte will write to all investors and advise those who are and who are not eligible for a payment.  If your contact details have changed since 2008, please contact Deloitte now with your new contact details as described above.

Once the validation process is complete, the settlement will then be promptly distributed.  At this stage we expect that the distribution will occur between October and November 2015.  Once the date for distribution is known, a press release or public notice will be issued and further information will be available on the Deloitte and FMA websites.

What information will an “Eligible Investor” need to confirm to Deloitte?

In due course the information that each investor will need to compile when the investor confirmation letter is sent:

  • Completed and signed Investor Confirmation Form (which will be attached to the investor confirmation letter).
  • Verification of up to date contact details (e.g. name, postal address, daytime phone number, email address).
  • Your investor ID Number (this will be a 5 digit number on your Hanover investment correspondence).
  • Your IRD Number (so we can cross check your records with the data held by Hanover to verify your identity).
  • One certified copy of identification for the investor account holder (e.g. passport, drivers licence, birth certificate, marriage certificate).
  • Proof of postal address (e.g. a copy of a recent electricity or rates bill).
  • Confirmation of the bank account where the pro rata share of the settlement sum should be paid into (e.g. deposit slip, or stamped letter from your bank).

What do you mean by “Certified Copies”?

A certified copy is a document that has been stamped (or endorsed) as a true copy of the original, by a person authorised by law to take statutory declarations.  This person may be a lawyer, notary public, Justice of the Peace or court official.

What do I do if I have questions regarding my eligibility?

If you have any questions about eligibility, please contact us in writing by:

(a)   submitting an enquiry via our dedicated investor website at www.deloitte.com/nz/hanover; or

(b)   using the email address nzhanover@deloitte.co.nz; or

(c)   posting a letter to Hanover Finance Companies Distribution, C/- Deloitte, PO Box 1990, Wellington 6140.

If you would prefer to speak with someone, you can contact us on 0800 HAN OVE (0800 426 683).  If you need to leave a message please provide us with a telephone number that we can contact you on and a suitable time to call you back.

Examples of “Eligible Investors”.

Investor A is a Secured Depositor in Hanover Finance Limited (“HFL”).  She invested $100,000 with HFL on 22 July 2006 at an interest rate of 10% p.a.  Her investment matured on 22 July 2008, with $121,000* due to be paid to her.  Investor A decided to reinvest her $121,000 with HFL for a further two years at an interest rate at 12% p.a.  As she reinvested on 22 July 2008 which is within the “Relevant Period” (i.e. 7 December 2007 to 23 July 2008) Investor A is an “Eligible Investor”.

The estimated distribution to each “Eligible Investor” in HFL is 14 to 17 cents in the dollar.  As such, Investor A will likely receive between $16,940 ($121,000 x 0.14) and $20,570 ($121,000 x 0.17) in the upcoming distribution.

*Interest (Year One): $100,000 x 10% = $10,000; Interest (Year Two): ($100,000 + $10,000) x 10% = $11,000.

Investment upon maturity = Original principal + Interest = $100,000 + $21,000 = $121,000

Investor B is a bondholder in Hanover Capital Limited (“HCL”).  He invested $50,000 with HCL on 3 December 2005 at an interest rate of 10% p.a.  His investment matured on 3 December 2007, with $60,500* due to be paid to him.  However, Investor B decided to reinvest his $60,500 HCL for a further two years at an interest rate at 12% p.a.  Investor B then made a further $10,000 investment on 1 April 2008 in HCL at an interest rate of 12% p.a.  On 23 July 2008, Investor B is owed $75,496**. However Investor B is an “Eligible Investor” based on his $10,000 plus interest investment only ($10,374 including interest).  Investor B’s reinvestment of $60,500 occurred 4 days outside the “Relevant Period” (on 3 December 2007, not 7 December 2007) and is therefore not eligible.

The estimated distribution to each “Eligible Investor” in HCL is 5 to 7 cents in the dollar.  As such, Investor B will likely receive between $519 ($10,374 x 0.05) and $726 ($10,374 x 0.07) in the upcoming distribution.

*Interest (Year One): $50,000 x 10% = $5,000; Interest (Year Two): ($50,000 + $5,000) x 10% = $5,500.

Investment upon maturity = Original principal + Interest = $50,000 + $10,500 = $60,500

**Interest on $60,500 from 3 December 2007 to 23 July 2008: ($60,500 x 12% x 233/366 days) = $4,622

Interest on $10,000 from 1 April 2008 to 23 July 2008: ($10,000 x 12% x 114/366 days) = $374

Investment outstanding on 23 July 2008: ($60,500 + $4,622) + ($10,000 + $374) = $75,496

Investor C is a secured stockholder in United Finance Limited (“UFL”).  He invested $200,000 with UFL on 5 January 2008 at an interest rate of 12% p.a for six months. Investor C redeemed $100,000 of his investment and reinvested the remaining $111,934* on 5 July 2008 for another year at an interest rate of 12% p.a. While Investor C made a $200,000 investment during the “Relevant Period”, because he also redeemed $100,000 of it at maturity, it is only the reinvested amount plus interest of $112,595** that is eligible.

The estimated distribution to each “Eligible Investor” in UFL is 16 to 20 cents in the dollar.  As such, Investor C will likely receive between $18,015 ($112,595 x 0.16) and $22,519 ($112,595 x 0.20) in the distribution.

*Interest on $200,000 from 5 January 2008 to 5 July 2008: ($200,000 x 12% x 182/366 days) = $11,934

**Interest on $111,934 from 5 July 2008 to 23 July 2008 :($111,934 x 12% x 18/366 days) = $661

Investment outstanding on 23 July 2008: $111,934 + $661 = $112,595