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PGC repays $22M in bank debt from asset sales

Tuesday 17th July 2012

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Pyne Gould Corp, whose Perpetual Trust unit is being investigated by the market watchdog, will repay $22 million in bank debt after selling down the bulk of its stakes in Heartland New Zealand and PGG Wrightson last week.

The Christchurch-based firm sold $8 million of stock in Heartland and $2 million of shares in Wrightson, on top of an earlier sell-down that reaped $15.4 million for Pyne Gould, it said in a statement after the close of trading today. The excess $3.4 million will be "available for other investments," and the company plans to give a strategy update this week.

Managing director George Kerr "will provide a statement on the investment strategy for the PGC Group this week," it said.

The adequacy of Pyne Gould's disclosure has come under scrutiny in recent weeks after the Perpetual unit came under a Financial Markets Authority probe over $28 million of loans to the Torchlight Fund No 1 LP, which is managed by Kerr.

Pyne Gould said the share sales aren't required to cover the outstanding balance of the loan between the Torchlight fund and the Perpetual Cash Management Fund, which Torchlight said will be prepaid by the end of July.

Perpetual froze repayments out of its mortgage fund last week after a surge of redemption requests, and the cash management fund has been ordered to install two independent observers pending a substantive court hearing next month.

As at Friday, Torchlight's loan balance was less than 7.5 percent on a loan to value ratio of its net assets, and "comfortably covered by near term receivables," the company said.

Kerr and US hedge fund Baker Street Capital wrapped up a takeover bid for Pyne Gould via Australasian Equity Partners No 1 LP, securing 76 percent of the company in a 37-cents-a-share takeover bid that closed in March.

Kerr became involved in Pyne Gould in 2009, taking a cornerstone stake after the company faced large writedowns on the value of its Marac finance unit's property loan book, which has since been divested.

The shares fell 4.2 percent to a new low of 23 cents today, valuing the company at $49.8 million.

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