Monday 28th May 2018
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Mykco, the NZX-listed shell left over when Malaysian investors bought back the internet company Mykris, has agreed to buy Corporate Holdings (CHL) for $6.1 million in shares in a backdoor listing for non-bank lender General Finance and NZX sponsor Investment Research Group.
The biggest shareholders in Corporate Holdings are Malaysia-based Rewi Bugo and Brent King. King will manage the group, taking charge of his first finance company since exiting Dorchester Pacific in 2006.
Under the agreement, Mykco will buy all the shares of CHL it doesn't already own for $6.1 million, satisifed by the issue of 104.3 million new Mykco shares. The transaction amounts to 16.27 Mykco shares for every CHL share, Myko said in a statement.
A group of investors including King, Bugo, investment banker Marvin Lee and the Business Bakery's Grant Baker and Stephen Sinclair bought General Finance in December from parties associated with James Lockie and William Cairns. Pro-forma assets of Mykco stood at $17.7 million as at March 31 and liabilities at $10.5 million. More than 80 percent of assets are loan receivables.
"It's a very interesting time in the property market, particularly in residential, and there are significant opportunities available for smaller participants," King said. The application for the backdoor listing is currently with NZX and Mykco hopes to have a decision in about a month, meaning it could hold a shareholders meeting to approve the transaction in late June, he said.
General Finance started business in 1999 as a second mortgage lender and expanded to a full range of home loan products two years later. It has been issuing prospectuses for term deposits since 2004. According to its last annual report, home mortgage lending peaked at more than $400 million in 2007, the year it sold its prime mortgage portfolio.
King founded Dorchester and built it into a $480 million company by assets but after his departure it was dragged down by a disastrous investment in St Laurence and went into a moratorium in 2009 because it couldn't meet payments to debenture holders. However, it had attracted Business Bakery as a cornerstone shareholder and unlike many finance companies, it survived the global financial crisis by convincing investors to accept a complex asset swap. It is now the profitable listed Turners Automotive Group.
General Finance has hired Greg Pearce as lending and credit manager, the same role he held at Dorchester between 1997 and 2008. Chief financial officer Garth Ward previously worked for Allied Nationwide Finance when it was placed in receivership in 2010.
After the transaction is completed, the vendors of the shares of CHL will hold more than 85 percent of Mykco. Bugo's Borneo Capital will hold 26.3 percent and King will hold 16.9 percent.
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