Pyne Gould warns of value loss if Torchlight unit wound up too early

Friday 19th February 2016

Pyne Gould Corp, whose NZX-listed shares have been suspended from trading since October, is warning that an early wind up of the Torchlight Fund housing distressed assets it manages would lead to a loss of value for investors.

The Guernsey-based company is embroiled in litigation with investors who are seeking to wind up the Torchlight Fund and have brought legal action in the Cayman Islands. Last month, the court granted an injunction preventing payment to the fund's general partner without the investors' consent, Pyne Gould said in a statement. The petition had sought an injunction preventing the use of proceeds from the sale of Torchlight's Local World newspaper group for $45 million.

"The general partner is robustly opposing the petition as it is not in the best interest of the partnership for the underlying assets to be liquidated, as is being sought by the petitioners," Pyne Gould said. "The general partner believes it self-evident that a premature liquidation of the assets of TLP will result in substantial value loss for all limited partners."

Pyne Gould set up the Torchlight unit to buy distressed assets after the collapse of New Zealand's finance sector, as a way to house bad loans as part of the recapitalisation of Marac Finance which was later sold into the Heartland Bank merger.

The financial services firm controlled by managing director George Kerr faces litigation on several fronts, including a disputed penalty fee on a A$37 million loan from Australian businessman John Grill, and damages claims and counter-claims over Pyne Gould's sale of Perpetual Trust to Bath Street Capital.

Separately, the company said Grant Thornton had completed the first audit of the 2015 accounts for Pyne Gould's Torchlight subsidiary with an unqualified opinion, and was working to consolidate that into the group accounts. Pyne Gould has yet to file its 2015 accounts, prompting the suspension of its shares on the NZX, the second year in a row it was censured for a late annual report.

The shares last traded at 24.5 cents.

BusinessDesk.co.nz

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