Avanti Finance converts sister firm Galatos into subsidiary

Until now, Avanti Finance and Galatos operated as sister companies owned by the same parent G&S Investment. Galatos purchases loans from Avanti by funding it through a bank facility it has with ANZ while Avanti funds itself through debentures.

The shares were bought at a net asset value of around $13.8 million. CEO Glenn Hawkins says the deal had an endorsement from Standard & Poor's who were keen to see more clarity in the relationship.

For Avanti debenture holders, the development is a positive as Galatos is now a guarantor to the securities offered by the company under its prospectus. The charge, however, will rank behind the existing general security agreement that Galatos has granted in favour of its bank.

It may be noted that in August, S&P revised the outlook on Avanti to stable from negative while confirming the BB- credit rating. The move reflected its view that the company will continue to successfully manage its asset quality and credit costs.