Retail investors in Geneva Finance are being asked to agree to a repayment plan that will require some of their money being swapped for Geneva shares.
A vote on the finance company proposal is to be held at a meeting of investors on April 28.
Chief executive Shaun Riley said yesterday the schedule of payments offered certainty to Geneva's investors.
"If they accept our proposal they can have full confidence that they will have their investments repaid in the form of shares and cash while still receiving monthly interest.''
Last November, Geneva secured a six-month freeze on repayments, while continuing to pay interest in full on all investments.
Under the new proposal, Bank of Scotland, which was owed $43 million, would be repaid $8 million over five months to September, with the balance to be rescheduled as a term loan, repayable no earlier than April 2011.
At the same time, Geneva wanted to convert 15% of what it owed retail debenture investors, and 55% of what it owed subordinated note holders, into new shares.
Those shares would be listed on the NZAX alternative market.
The remainder of debenture investors' principal would be repaid in instalments during the next four years, starting with a 15% payment in May.
Monthly interest payments would continue at an increased minimum rate of 11% for debenture and 13% for subordinated notes, the company said.
Mr Riley said the proposal was a viable alternative to receivership, and demonstrated the company was able to manage its way out of the difficulties caused by "near-recession conditions of this market''.
"Receivership would be a poor option because of the devaluation of the loan book in the current market, and third-party investors are extremely wary of making commitments until the economic situation has stabilised.''
The proposal provided a robust capital structure on which the company could grow organically and through other opportunities in the knowledge that demand for consumer finance products in New Zealand outstripped the current supply, he said.
Investors in Geneva held $98 million in secured debentures and $12 million in subordinated notes.
Incoming managing director David O'Connell said the company remained operational and continued to lend.
During the six-month moratorium period, which ends on April 30, Geneva was on target to achieve its forecast $26 million cash reserve.
"One of the achievements of the moratorium period is that Geneva has retained a talented and committed management team and loyal staff who have worked tirelessly during a difficult period.''
During the moratorium, Geneva had paid interest in full on all investments, made changes to its lending criteria, closed 21 retail branches and cut staff by 150.
