Strategic managers agree terms of $90m buyout

Monday 1st September 2008

A group led by Strategic Finance's managers and directors agreed terms to acquire the business from Allco HIT in a deal valued at about NZ$90 million.

The group will pay NZ$25 million cash, inject NZ$15 million of new funds into the business and acquire loans for NZ$50.2 million, according to a company statement today. As part of the transaction, partner BOS International will increase its debt facilities to the company to NZ$150 million from NZ$100 million.

The deal amounts to a rescue of the unprofitable finance company, which halted payments to investors to avoid a liquidity crunch. Holders of its debentures, notes and preference shares will be asked to accept new terms, with the bulk of the securities to be replaced by new debt instruments that trade on the NZX.

Remaining debenture stock will be repaid on a delayed basis over 24 months, it said.

By extending the period for repayments and amending the interest paid, Strategic may buy enough time to recover from a slump in liquidity that's hampered the company's ability to pay investors.

By Jonathan Underhill

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