Finance subsidiary for VTL

The finance company, to be called Nathans Finance NZ Limited, will issue a prospectus to raise up to $10 million in secured debenture stock.

The minimum investment is $1,000 for fixed terms ranging from three months to five years, at varying fixed interest rates.

Chairman, Richard Janes, says the VendSmart programme, which licenses vending machines to small scale third party operators, has recently confirmed its potential to enhance revenue and reduce costs.

"At the same time it has created a profitable financing opportunity in supporting operators who require additional funds to finance growth in their underlying business.

"It will meet a clear demand from our expanding machine licensing activities and will form an integral part of the VTL Group strategy."

At the same time as announcing the new subsidiary VTL has cancelled a planned 1 for 10 rights issue to raise around $7.4 million.

Till now the rights issue had been on hold after being postponed in the wake of the US attacks on September 11.

Some $2.5 million from the issue had been ear-marked to pay for the purchase and integration of Australian vending company Soche, but VTL withdrew from that deal in September based on a weakened outlook for the Australian economy.

Mr Janes said at the time that, because of an increasingly uncertain macroeonomic outlook in Australia, VTL's directors had deemed it prudent to exercise a clause in the purchase agreement that allowed them to cancel the deal "in the face of adverse and unprecedented market conditions."

Melbourne-based Soche however is unhappy with the cancelled deal and is taking legal action in Australia against VTL, claiming damages of $1.78 million plus other costs. Soche alleges the company pulled out of the sale after the settlement date of September 19.

VTL chairman, Richard Janes, says its legal advice was that the clause it cited to withdraw from the deal was operational and it plans to vigorously defend the legal challenge.

The first hearing is expected to take place early next year.

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