GSI suspends investment redemptions amid loan concerns
Baw Baw News By William PJ Kulich // 16:38, Monday 22 July 2013
GIPPSLAND lender Gippsland Secured Investments has told investors they can no longer make redemptions after a review of its prospectus heightened concerns about the viability of some loans.
The non-bank lender said in a statement on Friday it had suspended redemptions of “at call” and fixed term investments for an undefined period after it stopped accepting new and changes to those investments on 10 July.
On 10 July GSI said it had stopped accepting new investments while it drafted a replacement for its 19 April prospectus, but Friday’s announcement by managing director Glenn Sanford came before that review’s completion.
“Although this review has not been completed, the directors of GSI have been provided with information showing that there will be material increase in GSI’s provisions for impairment of loans,” Mr Sanford said.
“GSI’s directors intended to disclose information regarding these matters in the replacement prospectus, but as work to finalise the replacement prospectus has proceeded the directors have concluded that the result of recognising the impairments is that GSI may have a deficiency in its net tangible assets and may not have equity equal to the shortfall.
“In light of these matters, the directors have considered the appropriate steps to be taken to preserve GSI’s property for the benefit of noteholders, and to ensure equitable treatment of noteholders.”
The company said the replacement prospectus would “disclose new information to investors” as it reviewed some loans and security properties with professional assistance.
“The outcome of that review may impact on the value of GSI’s total tangible assets,” Mr Sanford said.
At call investors were still able to make withdrawals and fixed term investors still received maturity payments after the 10 July announcement.
GSI won awards at the 2011 and 2012 Baw Baw Business Excellence Awards.
The company’s website warns potential investors “all investments involve risk and investors could risk losing some or all of their investment.”
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