Finance uncertainty for 2 Cheap

NZ Automotive Investments (NZAI) has announced its bank is unable to provide any assurance of support for its trade finance and motor finance facilities beyond their current expiry dates.

The parent company of 2 Cheap Cars says the advice from its bank is understood to relate to the recent boardroom upheavals at NZAI, rather than the financial position of the business.

All non-executive directors of the company – Charles Bolt, Tim Cook and Tracy Rowsell – and executive director Eugene Williams resigned last month over a breakdown of trust with major shareholder David Sena.

NZX’s regulator, NZ RegCo, has also queried the independence of Gordon Shaw and Michael Stiassny, who have been nominated by Sena to fill the vacancies on the board.

David Page, NZAI’s chief executive, says the company’s trade finance facility from its bank is used to fund the purchase of imported motor vehicles and operates under a limit of $8 million. 

“The amount of $8m had been drawn under this facility as at June 30, 2022. This facility has a maturity date of December 31, 2022,” he explains in a statement to the NZX. 

“The motor finance facility has a limit of $6m and a maturity date of February 24, 2024. As at June 30, 2022, $4m had been drawn down under this facility. 

“The outgoing board expects that the incoming board and management of the company will engage with the current financier regarding arrangements for the trade finance facility that matures in December 2022.”

Page adds in his August 9 statement that the company is in a sound financial position, and in compliance with all of its banking covenants as at July 31. 

He notes as at June 30 the company had cash of $5.5m, net debt of $6.5m and total equity of $15.2m. 

“The company has continued to trade profitably over the first four months of the new financial year,” he says. 

A more detailed update of the company’s financial performance and position will be provided to the market on or before August 20. NZAI says it will also update the NZX re its finance facilities. as required.