Kerr's Torchlight to come under scrutiny from the Australian Takeovers Panel

Monday 13th February 2012

George Kerr’s Torchlight Investment Group, a subsidiary of Pyne Gould Corp which specialises in squeezing value from underperforming assets, will come under scrutiny from the Australian Takeovers Panel after issuing ASX-listed RCL Group with a notice to review its debt facility.

RCL shareholder Payce Industries has lodged an application with the takeovers panel to prevent Torchlight from exercising any rights it may hold as the principal lender in relation to changes at the company’s board. It’s also seeking the delay of a scheduled general meeting if the panel can’t reach an interim order by tomorrow.

On Feb. 10, RCL halted its shares after Torchlight Real Estate Fund said it had until March 16 to secure an extension to a step down from its debt facility limit and that a separate A$600,000 loan on a Victoria project facility was in default. The notices were issued in response to RCL shareholders, Payce, LTHC and Lanox, who collectively own 18.5 percent of RCL, seeking to remove two of the company’s directors, and install their own board members.

Torchlight’s position on the make-up of the RCL board creates “circumstances which are likely to have an effect on the control or potential control of RCL Group,” Payce said in its submission. “Implementing the clauses would ‘very strongly tend to’ entrench the board and management of, and discourage competition for the control of, RCL Group.”

Last November the Torchlight fund bought Bank of Scotland International’s debt to RCL, which comprised of some A$97.7 million on its senior corporate debt facilities and A$100.3 million on project facilities as at June 30, according to the RCL annual report.

RCL owns residential property development lots in Victoria, New South Wales, Queensland, Western Australia and Queenstown, valued at A$191.1 million in the RCL June accounts. It has some A$55 million in loans over Australian developments and A$41.8 million lent on New Zealand projects.

The shares last traded at 4.5 Australian cents on Feb. 9, valuing the company at A$7.92 million by market capitalisation.

(BusinessDesk)

BusinessDesk.co.nz

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