Wellington - New Zealand's third-largest finance company, Hanover Finance Ltd, suspended business Wednesday, owing 16,500 investors more than 550 million New Zealand dollars (about 421 million US dollars).

"Against a backdrop of global credit uncertainties, falling property prices and lower reinvestment rates, the industry model has collapsed," joint owner Mark Hotchin said in a statement.

About half of New Zealand's 49 finance companies have now either collapsed or admitted they were unable to repay deposits on maturity inside the past two years, news reports said.

Hotchin said the Hanover board was also suspending capital and interest repayments as well as investments with its subsidiary United Finance Ltd and a sister company, Hanover Capital Ltd.

Hotchin - who owns the company with Eric Watson, one of New Zealand's richest men - said the company's board was "acting early to preserve value" as market conditions continued to deteriorate and uncertainty mounted over borrowers' abilities to repay.

"Alternate financiers are increasingly unwilling to step in, and we're also now starting to see borrowers trying to take advantage of the uncertainty to delay payments, further compounding the situation," he said.

Hotchin said directors were working on a plan to restructure the business.

He said the company was cancelling its contract to sponsor the weather report on Television New Zealand's nightly peak-hour news programme, in which it boasted Hanover would protect investors' deposits "whatever the economic weather." (dpa)