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Liquidation an option for Pyne Gould after Marac merger

Monday 1st November 2010

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Pyne Gould, the major partner in the proposed South Island bank, is considering liquidating its residue assets should its finance unit merge with smaller rivals.

Managing director Jeff Greenslade told shareholders at its annual meeting the company is mulling the future of PGC once its finance unit, Marac, merges with Canterbury Building Society and Southern Cross Building Society, including the liquidation and distribution of its assets.

Other options on the table for PGC are continuing as a holding company with 71% of the merged entity, or occupying a middle ground between the two extremes.

“There is a strategic direction towards banking and some activities may fit with this strategy, but there are activities such as Torchlight that clearly may not,” Greenslade said. “No decision has been made, no particular outcome is predetermined but we will be thorough and endeavour to be as swift as possible in reaching conclusions.”

The address comes as the firm and its future partners put forward offer documents to investors showing investment banks Cameron Partners and Northington Partners found the merger to be “compelling,” providing a more solid future for the three financiers than if they stayed on their own.

Greenslade previously flagged PGC was mulling how to carve out its Torchlight Fund assets, the investment vehicle of major shareholder George Kerr.

Kerr acquired a cornerstone stake last year when the company took a hit on the collapse in the property market, and set up a unit to take $90 million worth of dud Marac loans and put them into a new distressed asset vehicle called Real Estate Credit Fund Ltd.

Marac will push more property loans into the unit ahead of the merger to improve its balance sheet at the request of its minor partners, according to the offer documents.

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