Kerr and Baker Street make full takeover offer for Pyne Gould Corp at 33 cents

Monday 10th October 2011 14 Comments

Businessman George Kerr and major shareholder Baker Street Capital LP are trying to take Pyne Gould Corp. private via a full cash takeover offer at a price near a record-low share price, arguing the company "has little in common with the PGC shareholders have long been associated with".

The great-great-grandson of F H Pyne, who started one of PGC’s founding businesses, Pyne & Co. in 1887, has 80% of the capital of bid vehicle Australasian Equity Partners Fund No. 1 LP via Pyne Holdings and U.S. hedge fund Baker Street Capital has 20%.

AEP is offering 33 cents a share, which is a small premium to the 26-cent record-low reached last month and 27 cents in morning trading. The shares have since climbed to 29 cents.

Pyne Holdings owns 13.2% of PGC and Baker Street Capital owns 19.78%. The bidder says these holdings together with commitments from major shareholders with 4.53% give it a total 37.51% via lockup agreements.

"Baker Street and I have therefore decided that, with the remaining PGC businesses focusing on growth rather than dividends, it is appropriate to give all shareholders the opportunity to sell their shares for cash now," Kerr said.

"With world sharemarkets again experiencing significant volatility, a number of PGC's largest shareholders, including Accident Compensation Corp., have substantially reduced their shareholdings in recent weeks," he said.

PGC has announced large losses in two of the past three years and in May distributed shares it held in Heartland Building Society Holdings directly to shareholders.

It has a residual 9.5% holding in PGG Wrightson and a 6% holding in Heartland and it owns Perpetual Group, which encompasses Perpetual Asset Management. It also has a management contract for Equity Partners Infrastructure Company No.1 Ltd and also holds impaired assets from Marac.

PGC's assets needed patient investors with a long term horizon and they may need to contribute more capital, Kerr said.

If the takeover is successful, AEP will receive an annual management fee of $600,000 plus GST.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 10 October 2011 at 4:53 pm Allan said:

Yet another example of the long suffering shareholder being stiffed by the Directors of a Public Company, is this not the Company who not so long ago boasted that their shares had an underlying net asset backing of .60c. No wonder our sharemarket is losing investors with this type of thing going on. I for one will not be accepting the offer.

On 10 October 2011 at 6:19 pm ssmurf said:

I agree with Allan I will not be taking this offer either. I see ACC was quite happy to take a big fat loss with public money.

On 10 October 2011 at 9:28 pm Stuart said:

So the guy who traded on his family connections and encouraged the public to invest in his abilities to breath new life into PGC, has turned out to be nothing other than a con artist. The integrity of the man is appalling. I likewise will be staying if only to make him work harder.

On 10 October 2011 at 9:44 pm sadkmof admf said:

This is rubbish. Have been a loyal shareholder for so many years with the hope that one day it would come back somewhere respectable and provide me with if not a return but atleast my initial investment back. If i take up this offer i stand to lose over 10k. Might as well hold onto what ive got and hope for the best.

On 11 October 2011 at 5:37 am Peter said:

Why would international investors want to invest in a country where directors behave in this way? As I understand it, this is also one of your oldest companies is it not, which makes it even worse. Companies are an important part of the national fabric and should be preserved to some extent. Capitalism should run its course, but directors and shareholders do have a duty to preserve to some extent. Put another way. Looting of a company that was founded in 1850 is not allowed, especially by its own directors.

On 11 October 2011 at 1:17 pm michael said:

Where is the assumption that $0.33 is a good offer, when the NTA is $0.60 - a completely rip off and is yet another example of the shareholder who by in large supports the directors of the company, is being shafted !

On 11 October 2011 at 3:11 pm David said:

They see growth potential, not early dividend income. Why can't we stay for the same reason? This offshore reason smells to high heaven, asset-stripping? What else do they own in NZ?

On 11 October 2011 at 3:27 pm Stu said:

Notice how George Kerr's signature looks a lot like Bernard Whimp's?

On 11 October 2011 at 3:31 pm John McCarthy said:

Agree with comments, however as small shareholdes complaining will not achieve a better standard from directors, & management. The organisation that all small shareholders should join is the NZ shareholders association for a unified voice.

On 11 October 2011 at 6:18 pm john hammond said:

Yet another example of a public company director failing to understand that his duty to the public should take precedence over his own interests.

On 14 October 2011 at 2:09 pm D. T. K. said:

I'm very touched by Mr GK's concern for PGC shareholders in feeling it so appropriate to give us all an 'opportunity' to lock in a loss on our investment. Since the business is now so inappropriate for investors perhaps it should be wound up and NTA value returned to shareholders… no wait that might actually give more value back to the shareholders and leave GK and his buddies having to conjure up another elaborate scam… can't have that it would upset the system.

On 16 October 2011 at 1:13 pm Stephen McAnally said:

I agree with above comments. I will not be selling either.

On 28 October 2011 at 3:25 pm Allan said:

Hi all Does anyone know how to contact Reese Hart to give him proxys in the fight with the board of PGC? Much appreciated Allan

On 30 October 2011 at 12:22 pm John Mercer said:

I concur with the above comments. The directors have talked the company down in the hope that shareholders will accept the poor offer. They would then take over the company, turn it around, and benefit from improved returns from a low cost purchase price. I , too, will not be accepting the offer and encourage all shareholders to hang on to their shares and make the directors work to get the returns which should eventually come.