By Duncan Bridgeman
Friday 22nd August 2003
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The privately owned finance company recently departed from its core business of lending money and got into the corporate fray, spending an estimated $30 million buying a 9.5% stake in listed insurer Tower.
Some observers questioned whether it was prudent for the finance company to commit shareholder funds to that investment given it was not in the insurance business and took the risk it would lose money if it needed to cash up its stake in a hurry.
Asked what motivation was behind Hanover's involvement in Tower, chairman Mark Hotchin said he thought the company was undervalued and there were opportunities for growth, despite Tower's massive writedowns in Australia.
It is not clear whether the funds raised by the bond issue may be used for any other forays by Hanover into the sharemarket.
Elders said yesterday it hoped to raise up to $20 million to bulk up its capital structure in response to demand from existing investors.
Mr Hotchin said the bonds carried terms of three to five years, with interest rates ranging from 8.95% per annum to 9.35%.
Elders recently reported operating profit of $19.6 million for the 2003 financial year on revenue of $73.5 million.
Meanwhile managing director Kerry Finnigan has hinted Hanover may be interested in floating the company on the Stock Exchange but other sources said the company's owners, Mr Hotchin and Eric Watson, were not planning to list.
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