An offer to Strategic Finance investors to buy their debentures at 10 cents in the dollar is the subject of warnings today.
The offer to investors from Marchmont Securities Trust seeks to acquire up to $5 million worth of debentures at that price.
The Securities Commission urged investors to seek professional advice before making a decision.
"When a finance company is in moratorium it is very difficult to accurately assess the value of the company's debentures," the commission said in a statement.
Under securities law it is not illegal to offer to buy securities below their face value but any offer must not be misleading or deceptive.
Perpetual Trust, the trustee for Strategic Finance, said the offer was opportunistic.
"We believe the offer takes advantage of the present uncertainties that exist concerning Strategic's future, and may seriously undervalue the amount that investors could otherwise receive from Strategic," said Matthew Lancaster, head of Perpetual Trust's corporate trust business.
Perpetual considered that the Marchmont offer was likely to seriously undervalue the amount of each investor's investment in Strategic Finance.
Strategic Finance froze repayments to 15,000 investors and won approval for a managed wind down of its loan book as an alternative to receivership last year.
The company could not make a scheduled repayment to investors on January 7 and is in talks with Perpetual.
The value of its loans has fallen below the level required under its moratorium.
"Our negotiations with Strategic have not yet concluded, but they are progressing and an announcement of their outcome is expected to be made shortly. Investors should seek good advice before accepting the Marchmont offer at this point in the process," said Mr Lancaster.
