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NZF flags reverse listing with unidentified business

Thursday 18th September 2014

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NZF Group, the financial services company, has entered into a non-binding agreement with an unidentified business for a possible reverse listing, and expects to acquire it by the end of the month.

The Auckland-based finance company sought to liquidate itself earlier this year, but was blocked when a major noteholder asked for a special meeting to try and squeeze more value from the firm. Since then the board has sought to find a business to use the NZF shell for a reverse listing.

The board said today it had found a suitable business for acquisition, and expected to reveal full details and enter into a legally binding agreement to acquire the business by Sept. 30, once both businesses had conducted due diligence and completed disclosure documents for noteholders and shareholders.

At a special shareholders meeting in August, Nessock Custodians Ltd, which held more than 10 percent of the NZF's $18 million in capital notes, delayed liquidation to try and find more value in the business. The meeting passed resolutions to limit NZF's expenses to $50,000 a month until Sept. 30, while granting directors a further $50,000 to look at a transaction to boost NZF's value, and hold another meeting in September to make a final decision. The board said today another meeting wouldn't be necessary until it had finalised the reverse listing.

The board first suggested liquidation in April as its restructuring plans in a bid to return to profitability fell over when its auditor RSM Prince resigned the day after NZF was forced to restate its first-half results for a second time. NZF had planned to seek an early redemption of $18 million owed to capital noteholders in cash and shares as part of a restructure that would have seen it buy a significant enterprise generating annual sales of more than $100 million, it said in a statement at the time.

NZF was rebuffed by all but one audit firm, owing to its failed finance company and its inability to repay the capital notes in full, resulting in talks with the target business ending, it said.

Last year, NZF was fined $35,000 and suspended from trading on the New Zealand stock exchange after a four-and-a-half month delay in filing its annual report. At the time NZF said it was unable to fully value its divestment in its 50 percent stake in MPMH, a holding company for Mike Pero Mortgages, as it no longer had access to the financial statements.

The NZDX-listed notes, paying annual interest of 6 percent, last traded in June last year at a yield of 260 percent. NZF's shares last traded at 1 cent, valuing the firm at $1.1 million.


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