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Pyne Gould to distribute its South Island bank stake to shareholders

Monday 15th November 2010 2 Comments

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Pyne Gould plans to distribute most of its stake in the proposed South Island bank if the merger proceeds.

The remaining holding will be separately placed to investors about the same time as the distribution to raise cash for Pyne Gould, the company says. The exact amount to be distributed and how much will be placed hasn't been decided yet.

Today's statement says the stake will be 72% of the new bank, although previous documentation has put the holding at 71%.

Earlier this month, Pyne Gould said it was considering liquidating assets if the merger proceeds.

Key benefits of distributing the stake include greater liquidity for the new bank's shares, a better weighting in the NZX50 Index, greater institutional interest and greater transparency for Pyne Gould shareholders, the company says.

The distribution "is the best option to maximise value for ... shareholders," says chairman Bruce Irvine. It will mean the new bank "will be widely held by a broad range of investors with no single dominant shareholder."

The merger of Pyne Gould's Marac with CBS Canterbury and Southern Cross Building Society is scheduled for early February, 2011 and will see the two building societies holding 14.5% each, according to previous statements.

The three companies had total assets of $2.2 billion at June 30 of which $289 million was shareholders' equity.

Pyne Gould chief executive Jeff Greenslade says his company is still considering its options in respect of its other assets. Greenslade, chief financial officer Sean Kam and general counsel Michael Jonas will remain at Pyne Gould until the placement and distribution, after which they will become full-time employees of the new bank, the company says.

Following the transition, the three executives will continue to provide management services to Pyne Gould "for a short period until satisfactory arrangements are made."

Pyne Gould shares rose 2.4% to 42 cents after today's statement. The shares have traded between 37 cents and 50 cents over the last 12 months.

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Comments from our readers

On 15 November 2010 at 7:25 pm Christopher said:
Anticipated but nonetheless a sensible outcome.
On 16 November 2010 at 1:01 pm g murphy said:
the main question being. what price will the share holders sell at. comments please.
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