Pyne Gould no longer a dividend stock, needs capital to grow, Kerr says in takeover offer

Thursday 3rd November 2011 1 Comment

Pyne Gould Corp is no longer a high-dividend stock and needs owners with a long-term view and the ability to stump up more capital, major shareholder George Kerr says in a letter accompanying his $47.2 million takeover offer with Baker Street Capital.

Kerr has the support of holders of 37.5 percent of PGC via his own investment vehicles, California-based Baker Street and the Accident Compensation Corp, who have all signed a lock-up agreement to accept the 33 cents-a-share offer from Kerr’s Australasian Equity Partners Fund.

The target company is “fundamentally different in nature” since its biggest unit, Marac Finance, was folded into the NZX-listed finance company Heartland New Zealand, Kerr said in his covering letter.

“PGC is now a company more likely to re-invest its earnings in its assets with a patient seven years and beyond investment horizon,” he said. It may also need more capital for investment opportunities.

With Marac divested, PGC’s main assets were two units holding impaired assets from Marac, a 9.5 percent stake in PGG Wrightson, the management contract for Equity Partners Infrastructure Company No 1 (EPIC), a stake in EPIC, Torchlight Investment Group and Perpetual Group.

Kerr’s interests own about 14 percent of PGC and Baker Street holds 19.78 percent. Kerr said he and Baker Street were professional investors “strongly focused on value growth rather than simple income.”

The shares rose 3.1 percent to Kerr’s offer price of 33 cents in trading today.

BusinessDesk.co.nz

Comments from our readers

On 4 November 2011 at 8:48 pm Arty said:

I for one are ok with the strategy outlined above and here’s why. It would be very unluckly to take a hit on the impaired assets over the 7 year cycle, more likely some significant growth in value will be seen. Add to that the stated focus on growth, which is means share value growth and it is a win win. I think George has misread shareholders and may find if he talked squarely with us the company would gain much support, rather than the feeling many of us currently have.