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Heartland says will raise an extra $3m funding


Wednesday 20th July 2011

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Would-be bank Heartland says it will increase to $58 million the amount it will raise to fund its purchase of the finance arm of agribusiness PGG Wrightson.

The money, $3 million more than originally announced, would be raised through a share sale to institutions and a share purchase plan.

Heartland said it would raise $35 million through the share purchase scheme at 75c a share.

Shares in Heartland closed down 1.6 percent at 61c.

The Heartland Group warned earlier this month that its profitability might be hurt if it was not approved to operate as a bank.

It said that the registration process under the Reserve Bank Act was of "indeterminate length" and that "there is no certainty that Heartland will be able to meet all relevant criteria ... and become a registered bank".

"In the event Heartland is unable to obtain bank registration, or there is a significant delay in obtaining such registration, or there is a significant delay in obtaining such registration, the profitability of the Heartland Group may be adversely affected."

It had registered a prospectus for a proposed transfer of PGG Wrightson Finance (PWF) debt securities, which it said would all become debt securities issued by Heartland's subsidiary, Heartland Building Society (HBS).

It said the maximum amount of deposits being issued was $2 billion. It had net loans and advances of $1.795 billion, retail deposits of $1.677 billion, total liabilities of $1.891 billion and equity of 292 million.

PWF debt security holders would vote on the debt on August 8.

Heartland began business as a financial services provider in January after Marac became a wholly owned subsidiary of Heartland.

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