Centenary Bulletin 13 – Repfin Finance
November 14, 2018
Forest and Construction Equipment had a problem, common to all vehicle and machinery sellers who sell equipment and accept a trade-in as part of the transaction.
The profit for a seller, who is often operating on low margins, is in the trade-in. This traded piece of equipment needs to be valued at market price, and needs to be something that can be re-sold quickly. FCE often was selling a log skidder, loader or dozer, at or below cost, and receiving a trade-in as the profit in the deal.
In no time FCE’s yards, in the various branches, were filled with worn out, obsolete and sometimes inoperative machinery of dubious origin. This accumulated ‘junk’ was the potential profit from its operations, but in many cases, was simply unsaleable.
When a rare potential customer did appear, inevitably he did not have enough money to purchase, and was also regarded as a bad credit risk by the conventional financiers.
Enter Repfin – a joint business venture between Generalfin and Norman G Clark. Effectively a branch of FCE, it immediately started financing the unfinanceable – and clearing FCE of its traded ‘floor’ stock, allowing FCE to book profits by transferring the debt and risk to Repfin. This was a real smoke and mirrors act, and while it did clear the FCE yards of rusting metal, and introduced some cash flow, it was never going to solve the problem of the original poor decision to trade equipment at prices higher than true value.
Most of the Repfin business was in Tasmania, where some of the world’s most unusual equipment had gravitated to before being traded by FCE – usually to one of the locals, who had no cash but “a contract” or “an opportunity, to make big money” – if they could just get their hands on “that machine”!
Tasmania is a small place, but even smaller where logging or construction is concerned. Everyone knows what is going on around the corner, and down the road, and Repfin soon had a reputation as an easy way to get machinery and finance. Once the first instalment was paid the machine headed bush, and in some cases, was never seen again.Tasmania might be small, but it was easy to hide a ten-ton loader or logging skidder away from the debt collector. In most cases, the monthly lease payment would not arrive, and the whole exercise soon developed into a financial disaster.
Robbie Clark took on the job of clearing up the mess. This meant travelling to Tasmania monthly, and holding the hand of the responsible party (if he could be found) while he signed a cheque, or peeled bank notes out a wad extracted from some deep pocket.
That sounds easy, but strangely enough, most of the Repfin customers were not enthusiastic about paying, and once word got out that Rob was on the island, they scattered to the hills.
A Typical Repfin Repossession
One logging contractor just disappeared altogether never to be see again complete with machine. Another, while cleaning his shot gun, said he did not plan to ever pay …ever! The sign on his farm gate read, “TRESSPASSERS WILL BE SHOT ON SIGHT”. That was one handed over to the lawyers. Others never had their chequebook with them, or “were waiting for a big cheque from “the chip mill” or “the Hydro” to appear.
One of the few reliable payers insisted on taking Robbie home, where MUM controlled the cheque book. Over tea and salada biscuits, with a combination of vegemite and tomato, Robbie was asked to fill out the cheque for whatever was owed. It was signed with an “X”, and he was told “not to bank it for a few days”. Fortunately, the cheques never bounced.
In those days, flights from Launceston to Melbourne were infrequent, always both TAA and Ansett 727’s leaving at the same time, with the last flight each day around 4.30 pm. It was always a struggle to meet these flights after the “tea and salada” entertainment. Always returning with a “gift for John” the highlight of which were two frozen wallabies in a plastic bag, with their unskinned frozen tails protruding. Being the last onboard the Ansett flight, with cabin baggage of an obvious semi legal cargo, the hostess offered to store them in the aircraft refrigerator. Unfortunately, on arrival at Tullamarine, and in his haste to get off, Robbie left the wallabies behind and was much too fast for the pursuing hostess through the terminal, trying to return his frozen cargo.
Repfin went the way of FCE. It was wound up and closed, with significant losses which were transferred to Norman G Clark.
Repfin was a lesson well learned, ie. never again get into the risky finance business!