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Allan Hawkins takes second tilt at Cynotech

Tuesday 19th January 2010

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Allan Hawkins is confident of success in his second attempt to take Cynotech Holdings private after the Takeovers Panel granted exemptions for his preference share scheme.

Hawkins’ Cynotech Securities Group, a private investment company, was knocked back before Christmas in its initial proposal to acquire the publicly traded finance, satellite telephone provider and ice-cream cone manufacturer.

The private firm plans to issue preference shares paying 8% interest to holders of shares, notes and warrants of Cynotech Holdings.

“The top 200 shareholders are pretty well known to us, and they’d control between 80%-90% of the company,” Hawkins told BusinessWire. “The publicly issued financial statements of Cynotech show that it is in a sound financial position with a high level of equity funds.”

“CSGL and I simply believe that the shareholders of Cynotech may be in a position to invest their own funds in a more personally oriented and profitable way in the future period, rather than having their investment funds in Cynotech,” he said.

Shares of Cynotech last traded at 8.5 cents, valuing the company at $10.7 million. The stock has tumbled 49% in the past six months and Hawkins says the company hasn’t benefited from its listing and associated costs.

The Takeovers Panel exempted CSGL from some of its criteria around convertible securities and specified security holders, and said the takeover wouldn’t disadvantage other security holders of Cynotech.

Interests associated Hawkins’ family currently own about 22% of the listed company.

The takeover offer converts each ordinary and convertible preference share in Cynotech to one preference share in CSGL, while each 33.75 warrants in Cynotech will also receive a CGSL preference share. Each CSGL preference share has an attributed value of 13.5 cents, according to CSGL’s statements.

Hawkins said that CSGL has been put in place as a way of cashing up and privatising the Cynotech group, and returning investment funds to shareholders.

Cynotech directors have previously said that the small finance company sector will not start to improve for a least the next two years, and that with current adverse public perception of the finance sector it isn’t probable that its NZX listing will be of any advantage to it as a funding mechanism in the near future.

Though Cynotech has come through the finance sector implosion unscathed, this part of its business will not be its immediate growth path, Hawkins said.

Cynotech equity security holders will receive the takeover documents in early February.

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