Thursday 20th of November 2008

Hanover’s always been good at selling its wares, but now the true test has arrived. Can it sell its debt restructuring plan to its 16,000 investors? On presentation the company has started well – indeed done much better than other finance companies. It has today given the media a detailed briefing. Next it embarks on a series of investor presentations around the country. It has been pretty open about its situation and its plans. That is a major plus. As for the plan itself. Well you would have to give the shareholders (Mark Hotchin and Eric Watson) a top score for stumping up with $96 million in support. However, don’t be fooled by the size of the number. It includes property assets which may be worth less than what they are put into the company at (even though their value has already been discounted), and some of the cash support is in contingent form, rather than a cold, hard cash payment. But at least they are backing their company. What’s more than have aspirations that it has a future after this plan is finalised in 2013. One thing which struck me in the media conference today and with my interview with Mark Hotchin and chief executive Peter Fredricson, is the repeated use of this phrase: “We don’t know what we don’t know.” It was used many times and sums up their dilemma. The fate of the business and the debt restructuring plan is predicated on what happens to the property market over the next few years. If it picks up, or more importantly doesn’t tank, then the outlook is optimistic. If it does tank…well, I think you can work out the answer. What I also like is that the shareholders and management are backing themselves to do a better job than receivers. I support this argument, even though some of my peers don’t.