Torchlight buyer of land at Jacks Point in deal that predated Kerr takeover offer

Tuesday 8th November 2011

Torchlight, the distressed asset management company run by George Kerr, was the buyer of land in a recently announced approval from the Overseas Investment Office, Pyne Gould Corp has confirmed.

Chairman Bryan Mogridge told BusinessDesk the deal happened 15 months ago, and was not linked to Kerr’s takeover bid for Pyne Gould with US hedge fund Baker Street Capital. Mogridge issued a statement to the NZX criticising a media report linking the purchase to the takeover.

“Fifteen months ago it did this land transaction,” Mogridge said, long before Kerr’s takeover bid emerged last month.

The Sunday Star-Times report cited records showing Torchlight (GP) 1 subsidiaries paid almost $40 million for 202 hectares in Queenstown and Wanaka, including 63 hectares of vacant residential land in Jacks Point and 139 hectares at Wanaka’s Henley Downs development.

The transaction emerged in the September approvals from the Overseas Investment Office, which showed an unnamed applicant purchased 202 hectares of land in Queenstown and Wanaka, and a mortgage over 18 hectares at Jacks Point, from an unnamed seller for a confidential amount.

The notice said the buyer acquired rights or interests in 27 percent of the units of a confidential vehicle.

The timing of the OIO notice release coincided with Kerr’s bid to seize control of Torchlight-parent Pyne Gould in what’s been labelled a ‘low-ball’ offer of 33 cents per share.

Kerr and Baker Street Capital have support of 37.5 percent of Pyne Gould shareholders, including their own combined stake of about 33 percent, in a deal that would see their Australasian Equity Partners Fund take over and delist financial services company.

Last week, Kerr told Pyne Gould shareholders the firm is no longer a high-dividend stock without its Marac lending unit, and needs owners with a long-term investment horizon.

Pyne Gould’s shares were unchanged yesterday at 32 cents, 1 cent below Kerr’s offer.

Kerr’s Torchlight group is also making a play at an ASX-listed property fund, having secured the target board’s backing to take over the management of ING Real Estate Entertainment Fund at no cost. In exchange for the deal, Torchlight agreed to underwrite a A$15 million rights issue to the fund’s unitholders.

The fund was part of Kerr’s rescue package for Pyne Gould in 2009, which took the firm’s distressed loans from the Marac Finance unit. It gained public attention during the collapse of South Canterbury Finance after lending $100 million to the Timaru financier which had to be repaid before debenture holders under the government’s retail deposit guarantee.

BusinessDesk.co.nz

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