Pyne Gould eyes up return to court room over Perpetual Trust sale

Monday 2nd October 2017

Pyne Gould Corp says it's more likely to head back to the courtroom to pursue payments from the sale of Perpetual Trust.

The Guernsey, UK-based asset manager and Bath Street Capital dropped their High Court squabble over the trustee business transaction last year, citing Bath Street's work towards an initial public offering of the Complectus supervisory business as a means to settle the dispute. However, the IPO plans were shelved over market volatility, and a subsequent trade sale to Australia's Sargon Capital has also fallen through. It's now teamed up with private equity firm Direct Capital with a refinancing deal with an option to convert the loan for a 50 percent equity stake.

Bath Street principal Andrew Barnes built up Complectus with a series of acquisitions, started with the Perpetual purchase in 2013, and now oversees more than $130 billion of assets.

NZX-listed Pyne Gould put a 10 million British pound value on the Perpetual Trust receivable as at June 30 in its annual report, filed just before the close of trading on Friday. That was down from 11 million pounds a year earlier. The firm sees three scenarios: a successful Complectus float triggering the payment; pursuit through the courts; or zero recovery.

"The PGC directors note that the probability of the IPO scenario has reduced during the year and correspondingly, that the probability of the litigation scenario has increased," the annual report said. "Nevertheless, the directors remain confident of recovering the outstanding debt, however, time will be required."

External valuer Simmons Corporate Finance put a 60 percent chance of Pyne Gould pursuing the payment through the courts, up from 19 percent a year earlier. A successful IPO was given a 25 percent chance, down from 80 percent a year earlier, whereas zero recovery was given a 15 percent likelihood up from 1 percent in 2016.

Pyne Gould's board see the outcome as a binary all-or-nothing result, the annual report said.

The financial services firm wasn't a stranger to the courtroom during the June 2017 year. It was denied leave to appeal a A$31.5 million court-ordered payment to Australian businessman John Grills' Wilaci Pty over a loan to its Torchlight Fund No 1 LP in 2012, which saw the firm post a loss in the year ended June 30.

Separately, Pyne Gould has locked in a dispute with investors in the Torchlight fund who have been seeking to wind up the vehicle. The company's directors noted that action cast doubt on the fund's ability to continue as a going concern, and that in turn "could have a significant impact on the realisation value of the assets recorded within the group's consolidated financial statements". That risk was also noted by auditor Grant Thornton under an 'emphasis of matter' tag.

Pyne Gould shares jumped 20 percent to 24 cents, having slipped 2.4 percent so far this year.

(BusinessDesk)

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