Troubled NZ Automotive Investments (NZAI) is at risk of losing its financial backing because of its boardroom ructions.
Three NZAI independent directors quit in July over 'irreconcilable differences' with remaining director and major shareholder David Sena. Photo: Facebook / 2 Cheap Cars
The company, which has the 2 Cheap Cars used-car chain, has been warned by the bank providing backing for its associated finance and insurance operations that it will not give any assurance it will continue once the current facilities expire.
"This advice is understood to relate to recent announcements with respect to changes in the leadership and governance of the company as opposed to the current or forecast financial position of the business," NZAI said in a statement to the stock exchange.
NZAI has been embroiled in conflict after three independent directors resigned abruptly last month alleging they did not trust nor could they work with the company's major shareholder and executive director, David Sena, who had moved to replace them at the annual meeting later this month.
He responded that the directors needed to be replaced by people able to turn the company around and improve its profitability.
NZAI said it had a $8 million bank trade facility, which it used to finance the purchase of used cars, that was fully drawn and is due to expire at the end of the year.
It said it had another facility of $6m used for motor finance, of which it had used $4m, which will run to early 2024.
"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."
NZAI said it was trading profitably, in a sound financial position, complying with the conditions of its bank loans, and had cash of $5.5m as at the end of June.
The regulatory arm of the NZX has asked the company to explain how it will have the required number of independent directors, and to explain how potential directors nominated by Sena can be classified as independent.
