Dunedin-based cooperative Motor Trade Finances, which has NZ$585 million of vehicle lending spread across New Zealand, reported that it has been unable to borrow money from the European commercial paper market and is now reliant on a NZ$600 million standby lending facility from its banks, Commonwealth Bank and Westpac, to remain a going concern.MTF's funding model has been reliant in recent years on a Euro CP securitised lending facility rated A1+/P-1 by Standard and Poor's and Moody's. The Euro CP market has been shut in recent months because of the global credit crunch and the standby bank facility expires on December 23 this year. A loss of funding for MTF would have wider implications for car dealers, given the funding cooperative accounts for more than 12 per cent of the market. MTF is now the biggest vehicle lender in the New Zealand market after the departure of GE Money and GMAC last month."The European commercial paper market is almost impossible to issue into at the moment. We're fully drawn on our (bank) liquidity facility right now," MTF managing director Angus Bradshaw said.CBA has NZ$432 million of the facility, while Westpac has NZ$168 million.MTF is now raising NZ$8 million of fresh capital from its car dealer shareholders and is investigating other funding options, including eventually re-entering the retail debenture market. The capital raising would require its dealer shareholders to contribute either NZ$10,000 or NZ$20,000 to buy shares in the corporatised cooperative. MTF expects 80 per cent of its dealer shareholders will buy shares and also that its banks will roll over the facility again until June next year. MTF aims to raise up to NZ$20 million of capital, including capitalisation of undistributed profits and conversion of 'A' cooperative shares to regular shares.MTF shareholders agreed on October 29 to the capital raising plan, including the first half of the NZ$8 million capital raising in December. Eventually MTF is looking at other funding options, including the potential for outside equity."All other things being equal, our ultimate goal is to re-enter the retail funding arena," Bradshaw said.Meanwhile, MTF will have to surmount its December 23 bank funding rollover and look to re-enter the commercial paper market, possibly in Australia and New Zealand rather than Europe.Interest.co.nz