HGH - Heartland Group Holdings

Building Society Holdings (BSH) is now Heartland NZ Ltd (HNZ) so might as well start a new thread with the new name.

Quote:

---

Originally Posted by SCOTTY

Building Society Holdings (BSH) is now Heartland NZ Ltd (HNZ) so might as well start a new thread with the new name.

---

Its share price suggests that "hard land" is more suitable name.

Quote:

---

Originally Posted by Newman

Its share price suggests that "hard land" is more suitable name.

---

Love it.!!!!! lol

Seems the silk purse remains a sows ear........

Obviously ACC does not share the pessimistic view of the above posters as a SSH notice today says that they now own 5.64% of HNZ. Like me they see more of the "Promissed Land" to come.

Quote:

---

Originally Posted by SCOTTY

Obviously ACC does not share the pessimistic view of the above posters as a SSH notice today says that they now own 5.64% of HNZ. Like me they see more of the "Promissed Land" to come.

---

Unless they got them from their PGC holding.? They did have 54,444,099 PGC shares on 23/9/10.Will be interesting to see whether they think PGC or BSH is the road to the "Promissed Land".

Quote:

---

Originally Posted by belgarion

ITs worthwhile following what the ACC is up to as they have a pretty good track record. The fact that they are investing in a start-up that probably won't be paying a divie for quite a while suggests they see this as an exceptional investment (under their fund management rules) as I understand they usually have to recieve income fairly immediatley to help offset ACC claims.

---

Hardly a start-up belg. Marac and the other two businesses have been around for a day or two!!

As mentioned previously on the BSH thread, it will be interesting to see where reinvestment rates sit going into the end of the govt guarantee, as Heartland seems to have more reliance on guaranteed deposits than the other affected institutions. Interest rates on debentures should be a pointer as to how things are going (particularly relative to any movements in bank term deposit rates).

So here is the picture of rates as they were from March until around the time of the recent PGC vote meeting:
http://img.villagephotos.com/p/2006-...8apr11.png.jpg
And here is the current:
http://img.villagephotos.com/p/2006-...-jun11.png.jpg

The change is pretty subtle - in the 12 month and 18 month rates, which have crept up just 0.25%. However, by comparison, I would estimate that the typical bank term deposit rate has fallen by 0.5%, so the spread against banks has been widening.

No worries here yet, but worth watching.

NZX have announced Hearthland is to enter the NZX-50 index on June 20 (and PGC will exit it.)

Quote:

---

Originally Posted by belgarion

ITs worthwhile following what the ACC is up to as they have a pretty good track record. The fact that they are investing in a start-up that probably won't be paying a divie for quite a while suggests they see this as an exceptional investment (under their fund management rules) as I understand they usually have to recieve income fairly immediatley to help offset ACC claims.

---

ACC do have (or at least did have) a good record, but not for reasons of immediacy.

Levies pay the claims of today. The reserves are for the long tail typical of a compensation book that may need to pay long term injury claims years so there is very little that needs to be immediate beyond standard cashflow /treasury / cash management needs that the levies already meet. ACC are typically profitable on a cashflow basis and have little need to tap technical reserves - it's on the long tail actuarial view that reserves need to be established for.

This is also the secret of how private Worker Comp companies make money in other countries - they trade on smaller insurance margins because they understand the funds may be captive for decades before being required for claims so investment returns are consequently higher then a short tail insurance book like say State Insurance's who have to pay for Motor claims in short order.

Heartland New Zealand to acquire PGG Wrightson Finance

http://www.nzx.com/markets/NZSX/HNZ/...ghtson-Finance

Quote:

---

Originally Posted by MANDRAKE

Heartland New Zealand to acquire PGG Wrightson Finance

http://www.nzx.com/markets/NZSX/HNZ/...ghtson-Finance

---

put a few words of your point of view.

Well it wasn't exactly a surprise :) Seems a fairly conventional arrangement I guess. Good to see an assurance there will be no EPS dilution resulting frm the placement. I wonder how much in excess of 10% the ROE will eventually be? I'm not that confident it will be much, but would like to hear others opinions on that.

Quote:

---

Originally Posted by MANDRAKE

Well it wasn't exactly a surprise :) Seems a fairly conventional arrangement I guess. Good to see an assurance there will be no EPS dilution resulting frm the placement. I wonder how much in excess of 10% the ROE will eventually be? I'm not that confident it will be much, but would like to hear others opinions on that.

---

What is the equity now or would be in 2 years time? HNZ shares were issued at 88 cents, and new shares will be at 75 cents. When equity drops to 30 cent/share a ROE of 10% is not good.

Quote:

---

Originally Posted by belgarion

20 mill / 300 shares @ PER 10 = 66 cents per share. (Ozzy banks PERs betwenn 9 and 15)

---

After private placement and SPP, the issued shares will be more than 300 mil.

I am waiting for the announcement of SPP, so i just need to spend $30+ for the engagement of SPP:)

The article by Tim Hunter in today's Sunday Star Times on Heartland is well balanced and fair.
"And while there are undoubted risks that Heartland will not achieve its goals,its management have so far demonstrated a clear strategy and excellent execution.
On those grounds it may earn a place in the portfolio."

Yes Percy a well balanced article but I hope Hunter wasn't swayed by what Cairns from Forbar told him .... that guy is more passionate about PGC/HNZ than you are

As long as HNZ remember that at the core of their business is 2 old fashioned Building Societies they should do OK - building societies that traditionally solid instutions which for generations have taken members savings in and prudently lent that money out on rock solid investments without taking on much leverage and associated risk.

Go too far away from this principles and think they can make zillions from a different approach then maybe the aspirations wont be achieved

Bit of a worry when that head finance man says 'Heartland aims to encourage depositors by becoming a bank, reasoning that people are more relaxed about putting money in a bank than with a finance company' So is becoming a bank just one big (and expensive) marketing ploy

This is what happens when Building Societies become financial instutions with a treasury department and change their business model .... and probably why the world is in such a mess today

A great article by John Kay in the Financial Times - We let down diligent folk at the Halifax
http://www.johnkay.com/2008/09/24/we...at-the-halifax

Even if you don't read the whole article (it is a short one) read this bit

The business I joined gathered deposits from small savers, mostly through its branches. It lent the proceeds to house buyers. Founded as a self-help organisation by provident Yorkshire folk 150 years ago, the Halifax became the world’s largest mortgage lender. Its quality of service and competitive interest rates trounced conventional banks in the UK retail savings market. The simple business model was very robust. In the early 1990s, a combination of high interest rates, recession and falling house prices posed much more serious problems for UK homeowners than anything seen, or likely, in the current credit crunch. But the Halifax remained profitable and mortgages readily available

Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.

Accepting deposits and underwriting and administering mortgages requires that millions of records should be maintained and updated every day with almost no errors. This activity does not require flair or imagination but does require conscientious individuals with integrity and loyalty. The Halifax was a precision machine that made the most of the talents of ordinary people. I came to understand the fundamental incompatibility of the cultures of retail and investment banking and why the marriage of the two so often leads to tears.

(Really a story about business sustainability but thats another topic)

Quote:

---

Originally Posted by winner69

Yes Percy a well balanced article but I hope Hunter wasn't swayed by what Cairns from Forbar told him .... that guy is more passionate about PGC/HNZ than you are

As long as HNZ remember that at the core of their business is 2 old fashioned Building Societies they should do OK - building societies that traditionally solid instutions which for generations have taken members savings in and prudently lent that money out on rock solid investments without taking on much leverage and associated risk.

Go too far away from this principles and think they can make zillions from a different approach then maybe the aspirations wont be achieved

Bit of a worry when that head finance man says 'Heartland aims to encourage depositors by becoming a bank, reasoning that people are more relaxed about putting money in a bank than with a finance company' So is becoming a bank just one big (and expensive) marketing ploy

---

Marac was a very successful finance company for a good number of years ,before it got involved in property lending,which was its undoing.Made and still makes good money on business,motor vehicle, and plant lending.

It is going south :( ... Seems PGC is holding up better than HNZ right now...

Quote:

---

Originally Posted by belgarion

http://www.nzx.com/markets/NZSX/HNZ/...apital-Raising

Wayhey! Nice outcome for small investors.

Some fun and games to be had before the SPP tho [evil grin]

---

Belgarion, when you say nice outcome for small investors - is your rationale that small investors if they don't buy into the SPP won't have their holding diluted ?

If there are shares issued,and you don't take part,then your holding will be diluted.

I think Belgarion is refering to the discount to net asset backing of the SPP,but I'm sure he will elaborate.

Small investors can buy a few now and take part in the spp at a price which will either be better than (possibly much better than) or the same as other institutional investors.

They can also wait until after the results are out to make a decision on making an investment of up to $15,000 - these results are going to be fairly critical in giving some insight as to how HNZ might perform in the future, so that is a considerable amount of de-risking around their purchase.

However, the only thing not clear to me is what the cut-off date for owning shares in the spp is. The details are due to be announced by tomorrow - given the spp is going to open on 8 August, it is possible there may not be much time/too late to get on?

(bought a few anyway at 62cps - am assuming there is a reasonable chance of getting access to the spp still)

There will be a few fund management institutions with their noses out of joint? Underwriting to be done without them being involved and they have been doing their usual selling down in anticipation that they will get reset via the underwriting.

Underwritten by Impact Capital Management - formed July 1 2011, 100 shares, 100% owned by Impact Capital, 100 shares, owned by Greg Tomlinson, involving Richard Oliver

Seems like GK is having to call in favours from old Macquarie mates to get these deals away............

Hmmmm... Liz could be right... Holding but not salivating.... Yet !!!..

Just nosing around at the companies office and noticed there are approved name reservations there for Heartland Insurance Ltd, Heartland Kiwisaver Ltd, Heartland Trustee NZ Ltd, Heartland Building Society Ltd, Heartland Wealth Management Ltd.... at that rate, I half expected to come across a "Heartland Property Management Ltd" :) (No, there wasn't)

Not sure if they are just covering off the bases or an indication of strategic direction?

Quote:

---

Originally Posted by Lizard

Just nosing around at the companies office and noticed there are approved name reservations there for Heartland Insurance Ltd, Heartland Kiwisaver Ltd, Heartland Trustee NZ Ltd, Heartland Building Society Ltd, Heartland Wealth Management Ltd.... at that rate, I half expected to come across a "Heartland Property Management Ltd" :) (No, there wasn't)

Not sure if they are just covering off the bases or an indication of strategic direction?

---

Would think they are just covering bases,making sure no one else uses their name.Marac had insurance,so expect that is now Heartland Insurance.Trustee they would need,kiwisaver I don't know,building soc would be to cover the building socirties that joined Marac to form Heartland.
"Property management" may still be, and most probably remain a swear word for some time as that was Marac's down fall. Maybe in a year or two.!!!!

Quote:

---

Originally Posted by winner69

Bit of a worry when that head finance man says 'Heartland aims to encourage depositors by becoming a bank, reasoning that people are more relaxed about putting money in a bank than with a finance company' So is becoming a bank just one big (and expensive) marketing ploy

---

Not a holder Winner69, but I am becoming very uneasy about Heartland. What do you think of this observation?

I am presently visiting the Kapiti Coast and have read today's edition of the Dominion and the local rag the Kapiti Observer, both dated Wednesday 20th July.

On page B7 of the Dominion is an ad for PGG Wrightson Finance, an organization which seems inevitably destined to become part of Heartland. They are advertising a 12 month secured term deposit offering 7.5% per annum. This is despite the small print in the ad that notes any such investment will become a deposit with Heartland that will consequently be unsecured in a couple of months time (no mention of that last clause in the ad of course).

Then on p13 of the Kapiti Observer, a real 'heartland' publication (sic), Heartland are offering a 12 month term deposit rate of 6.25% per annum. This seems to be quite a big gap for what is ostensibly the same investment, even allowing for the fact the 'small print' shows that the PGG Wrightson Finance 7.5% rate is for investments of $100,000 plus.

The headline on the Heartland ad states 'We invest in Wellington'. Immediately I am thinking, no you don't! You are primarily the old Southern Cross and CBS Canterbury Building Societies, investing in the heart of the South Island. Oh and you are also Marac investing in the manufacturing heart of Wellington (yeah right, let me know if you can't count any manufacturer's left in Wellington on one hand!)

I can't help the impression that Heartland is really old rope painted and tarted up as a new frilly bow knot. The marketing budget is being spent to allow the paying of lower interest rates to depositors than a BBB- credit rated organization might otherwise offer. Pull the wrong string and the whole lot might unravel. I really, really hope that I am wrong.

I would like to see Heartland succeed. I think NZ inc. needs it! But is a 'Salt of the Earth' name and a hyped marketing budget really the key to the path of success?

SNOOPY

discl: Hold PGW, who are in the process of divesting PGG Wrightson Finance.

So much to learn.. So little time..

Oy vhey !!..

Thank you all for your input..

Snoopy - you probably also heard the ads on the radio as well --- all day long -- and playing the 'we invest in Wellington' card as well ... actually stressing that as well

The marketing machine ramping up .... haven't seen on TV yet ... an old wise guy once told me he never invested with any finance company that had to to resort to TV .... and cited all those that had been on TV and then gone bust

And yes I do find that statement from the head finance honcho a bit strange and a bit of worry

Every second car yard in NZ most probably uses Marac to finance their car,truck sales.If you look at any Marac/Heartland you will see their lending is spread through out NZ.Largest is offcourse Auckland area.
Most banks have at one time or other advertised on TV.Heartland is a "new" brand, so expect a lot of advertising.
Deposit rates vary with any organisation.Heartland is no different. They will just be trying to keep their book in order.
What is interesting is Lizard's earlier posts as to how Heartland deposits are stacking up for when government guarantee expires.Maybe all will be OK,but looks as though banking licence is going to be a must to get them through.
I will not be ading to my holding until I have seen result,although they have achieved everything they said they would do,and on time.!!!

http://www.stuff.co.nz/business/5317...and-share-plan

A bit more infor on Greg Tomlinson, the underwriter to Heartland's capital raising.

He is certainly going to do a lot better than George Kerr in terms of his entry price.

As one star brightens, the other dims.

Re Snoopy's comments, I checked the BSH merger presentation and that gave the combined geographical breakdown, with 7% of receivables and 8% of deposits coming from Wellington.

The rate on offer seems quite high at 7.5% - considerably higher than the 6.75% for a similar deposit on their web-site (annual interest payment). But the timeline for becoming non-guaranteed should be the same whether the deposit remains with PWF or moves to Heartland (i.e. all lose the guarantee at 31 Dec when it expires).

I have been following the Heartland interest rates, expecting them to move up to attract sufficient investors to remain with them. However, there have been only very subtle moves of around 0.25% increase in 9-18 month rates to attract investors beyond the end of the guarantee period. They have probably been fortunate in that bank rates have been falling and gifting them a wider spread over bank rates (which are generally below the recent CPI rate for now). The most recent moves at Heartland have been a reduction in the short term interest rates, further pushing investors towards "beyond the guarantee". Also of interest is that the MAR010 (2 yrs till maturity) are trading at around 8%, which suggests the market is reasonably comfortable with Heartland - it's a similar rate to the GFN030 (Guinness Peat) or the IFT150 (Infratil), although those both run until 2015.

While I think it is right to be cautious over their advertising, the crucial difference over GFC advertisers is that it seems many of them were seeking deposits to paper over impairments or capitalisation of interest. In Heartland's case, they have the challenge of re-building investor confidence heading beyond a period where investors can see their deposits as safely backed by the government.

The recent announcement of a June renewal rate of 82% intrigued me, as I wondered how it was achieved, but perhaps advertising is involved. Certainly they will need to stabilise deposits before they can start to go forward, so this is a critical phase for them. PWF actually appears to bring a less risk-averse depositor base, though possibly along with more scope for future impairments. If they are racking up the interest rates at PWF now rather than tarnish the Heartland rates to attract deposits, then that is an interesting marketing move too. Will have to see if I can find that ad...

Quote:

---

Originally Posted by Lizard

Small investors can buy a few now and take part in the spp at a price which will either be better than (possibly much better than) or the same as other institutional investors.

They can also wait until after the results are out to make a decision on making an investment of up to $15,000 - these results are going to be fairly critical in giving some insight as to how HNZ might perform in the future, so that is a considerable amount of de-risking around their purchase.

However, the only thing not clear to me is what the cut-off date for owning shares in the spp is. The details are due to be announced by tomorrow - given the spp is going to open on 8 August, it is possible there may not be much time/too late to get on?

(bought a few anyway at 62cps - am assuming there is a reasonable chance of getting access to the spp still)

---

Record date is 1st August.5pm.

The SPP discount is going to be "at least 3%" or around 2cps to the average price in late August - not exactly the most attractive SPP IMO.

Quote:

---

Originally Posted by Catalyst

The SPP discount is going to be "at least 3%" or around 2cps to the average price in late August - not exactly the most attractive SPP IMO.

---

It is not intended to be an attractive SPP. Some parties seem to want the capital raising to fali so they can end up with all the shares at 65 cents?

Quote:

---

Originally Posted by Balance

It is not intended to be an attractive SPP. Some parties seem to want the capital raising to fali so they can end up with all the shares at 65 cents?

---

So in that case, we can presume they will also want the VWAP to be at about 67cps during the price-set period to avoid giving anything extra away to retail investors? If that's the case, it might also be better to just buy on market now at 63cps, instead of gambling on the spp price being lower than 65cps. Although achieving 67cps VWAP might not be simple with the set period occurring post-result.

I'm still not clear what day the result is actually released, but presumably prior to open of trading on 19 August. Also note this is one of those spp's where investors won't be sure what price they're getting until after the spp closes, so will probably want to hold off committing funds until the last few days of the offer.

As shakespeare once said... "To buy or not to buy: that is the question". :-)

https://www.nzx.com/companies/HNZ/announcements/211912

"Heartland to offer staff an employee share plan
Heartland is pleased to announce that it is establishing an employee share plan (“Plan”) for employees of Heartland and its subsidiary companies. Directors and senior executives of the
Heartland Group will not be participants in the Plan.

The purpose of the Plan is to further the success of Heartland by aligning the interests of the employees in the Plan with those of Heartland’s shareholders, and to encourage participating employees to exercise long-term thinking to contribute to the long-term success of Heartland. "

And here I was naive enough to think the payment of a salary was to reward employees ... before the Company starts giving away money it'd be nice to see a return to shareholders first either by way of an increased share price or dividend.
Sorta reminiscent of PGC ... as to participate in any future share offering, what does this move tell you about the Company culture.

Quote:

---

Originally Posted by Grantas

https://www.nzx.com/companies/HNZ/announcements/211912

"Heartland to offer staff an employee share plan
Heartland is pleased to announce that it is establishing an employee share plan (“Plan”) for employees of Heartland and its subsidiary companies. Directors and senior executives of the
Heartland Group will not be participants in the Plan.

The purpose of the Plan is to further the success of Heartland by aligning the interests of the employees in the Plan with those of Heartland’s shareholders, and to encourage participating employees to exercise long-term thinking to contribute to the long-term success of Heartland. "

And here I was naive enough to think the payment of a salary was to reward employees ... before the Company starts giving away money it'd be nice to see a return to shareholders first either by way of an increased share price or dividend.
Sorta reminiscent of PGC ... as to participate in any future share offering, what does this move tell you about the Company culture.

---

I think it is a good idea. They are doing the decent thing and purchasing them on market,if I read right,which is way better than issueing new shares in my opinion.

I am more concerned with Pyne Gould C.

Today's release

Quote:

---

GENERAL: HNZ: Heartland New Zealand Share Purchase Plan Opens

NZX Release
Heartland New Zealand Share Purchase Plan Opens
8 August 2011

Heartland New Zealand Limited ("Heartland") (NZX: HNZ) is pleased to announce
its $35 million fully underwritten Share Purchase Plan ("SPP") opens today.

SPP documentation has been dispatched to all persons who held Heartland
shares at 5pm on 1 August 2011 and had a New Zealand address recorded in the
share register. A copy of the SPP
documentation is attached to this announcement.

The board of Heartland has determined that the pricing under the SPP will be
a discount of 5% to the average end of day market price of Heartland shares
over the 5 day trading period from 19 to 25 August 2011 (but in any case no
higher than 75 cents per share).

Eligible shareholders can each apply for up to $15,000 in value of new
shares. Scaling applies if the SPP is oversubscribed.

Eligible shareholders should complete and return their personalised
application form together with payment so as to be received by Link Market
Services Limited by 5pm on 24 August 2011.

The allotment date of the Heartland shares to be issued under the SPP is
expected to be 31 August 2011.

No brokerage or other transaction costs will be payable by shareholders. A
broker stamping fee of 0.5% of application monies will be payable to NZX
firms by Heartland on all valid applications bearing a broker stamp that are
received and accepted by the SPP closing date.

---

This is going to be interesting.

HNZ shareholders are looking like they might get offered at well below PGC's 75cps and the underwriters 65cps minimum. There is no mention in the booklet of any conditions on the underwriting (e.g. get-out clause triggered by a market fall).

Liquidity and funding update out.

Looks like HNZ has managed to maintain sufficient investor confidence to ensure they are well-positioned for the expiry of the government guarantee. I don't doubt they are keen to keep that confidence (and the confidence of shareholders who will have just received the spp papers at a time when investor confidence is struggling). Personally, I will still be waiting until the FY result is out before signing any cheques, but am cautiously positive.

http://www.sharechat.co.nz/article/1...bond-sale.html

Heartland considers bond sale

NZPA

Tuesday 9th August 2011 1 Comment
Text too small?

Heartland New Zealand is considering a retail bond sale.

The financial services firm said that if the proposed acquisition of PGG Wrightson Finance (PWF) proceeds Heartland will become responsible for $92 million of outstanding PWF bonds which mature in October 2011.

"Heartland has sufficient cash on hand to repay the maturing PWF bonds in full. However, given current demand for corporate bonds and the desire to retain the PWF deposit base, the board is considering a bond issue in the near future as part of a broader wholesale funding strategy," the company said.

Heartland has mandated Westpac and Bank of New Zealand regarding the potential retail bond issue.

PWF held three special meetings for bondholders, secured depositors and unsecured depositors today to vote on the proposed transfer of debt securities to Heartland.

The meetings were adjourned until August 15 as the required quorums were not present. An average 96.5 percent of those voting to date support the resolutions.
Comments from our readers
On 9 August 2011 at 8:38 am Arty said:
So on one hand, Heartland is giving 1m of shareholder funds to a staff share purchasing schemme, but on the other they are short of cash, seemingly. If this company wants to be a bank, it better start acting like one, tighten the ship up, start making a profit, then shareholders will give support. Until then Heartland just looks like another another finance house stumbling around looking for funding.

Standard and Poor's changes outlook of Heartland to negative from previously stable.

BBB- rating retained

https://www.nzx.com/companies/HNZ/announcements/212344


Boop boop de do

Marilyn

Maybe .. For what reason though ?? No skin off their nose if they give a bad report.

Disc. Holding.

Janner, Belg is inferring spin by Heartland, not S&P.....Allow me to put my spin on the statement

Quote:

---

The confirmation by Standard and Poors of the investment grade underpins the strength of Heartland

---

The rating is confirmed as close to junk, non investment grade

Quote:

---

The change in outlook does not imply any deterioration in underlying risk

---

Their margins do not reflect the risk profile of their assets, and they are probably sitting on too much cash hoping for the banking license. In the meantime they are being killed by the negative cost of carrying all this idle liquidity

S and P are concerned with the exposure to the property development sector and would like to see them out now, take the hit and move on before the situation deteriorates further

This stock has been in a downward trend for some time and shows no reason for encouragement going forward.

The underwriters (a $100 company formed in July) must be getting nervous, as who in their right mind would tip good money after bad into what is still effectively a finance company with ambitions that look more distant by the day.

Thank you Xerof.

Guilty as charged..

Just goes to show that one must analyse all statements..

Sorry Belg there was no ref:. apart from the " ...... " ..

My mistake..

Will continue to hold.. there has to be some excitment in one's life ;-))

Quote:

---

Originally Posted by Xerof

Janner, Belg is inferring spin by Heartland, not S&P.....Allow me to put my spin on the statement



The rating is confirmed as close to junk, non investment grade



Their margins do not reflect the risk profile of their assets, and they are probably sitting on too much cash hoping for the banking license. In the meantime they are being killed by the negative cost of carrying all this idle liquidity

S and P are concerned with the exposure to the property development sector and would like to see them out now, take the hit and move on before the situation deteriorates further

This stock has been in a downward trend for some time and shows no reason for encouragement going forward.

The underwriters (a $100 company formed in July) must be getting nervous, as who in their right mind would tip good money after bad into what is still effectively a finance company with ambitions that look more distant by the day.

---

What i'm confused about and would be interested in anyones thoughts......but i thought Heartland had exited their property development rollercoaster.....and these were now held by PGC. Also, the deal for PGWF is their good stuff and not at the risky high end side. In summary, is not Heartland a clean entity, with a lot less risk than what has been previously held.

"clean" is a relative state - the world moves on and the robustness of the book most likely has deteriorated since that activity took place - at least that appears to be the perspective from S and P

Quote:

---

Originally Posted by Xerof

"clean" is a relative state - the world moves on and the robustness of the book most likely has deteriorated since that activity took place - at least that appears to be the perspective from S and P

---

If the worlds economies are not improving,then a certain amount of stagnation,if not deterioration affects every loan as I'm sure you will appreciate,even your mortgage looks riskier.But you have to keep it in perspective,some on here are a wee bit negative,but when things turn,so does sentiment.

The sensitivity analysis shows how vulnerable that $24m forecast is though.

Also, still think they are optimistic re liquidity profile and impairments, but still looks as though it should all hold together. Another year and things might be coming together for them. Looks like spp will go through at a good price for small investors.

Quote:

---

Originally Posted by Lizard

The sensitivity analysis shows how vulnerable that $24m forecast is though.

Also, still think they are optimistic re liquidity profile and impairments, but still looks as though it should all hold together. Another year and things might be coming together for them. Looks like spp will go through at a good price for small investors.

---

That is a very interesting slide eh Lizard - some might say huge upsides as well

Looks like we need to keep an eye on those interest margins eh - 1% either way has a $14m impact

Quote:

---

Originally Posted by winner69

That is a very interesting slide eh Lizard - some might say huge upsides as well

Looks like we need to keep an eye on those interest margins eh - 1% either way has a $14m impact

---

Does anyone have any thoughts on whether it's good idea to upsize their holding in HNZ in respect of the SPP at a 5% discount, based on trading for today and next 4 days ? Naturally nobody has a crystal ball, though you could argue that todays price of $0.56 on open market may fair better than average weighted price less 5%, come next week.

If anybody has any thoughts, I would welcome them, that said will small shareholders take up the SPP, given todays results ??

Hi Corlemar,

If HNZ survives, then a 5% discount to todays price will probably be a very good deal and spp holders should opt for whatever they can afford. There's a strong chance they'll survive, but until the rate of overdues and impairments shows more signs of slowing and the liquidity constraints around the govt guarantee and the general attitude of investors in the new age of deleveraging-by-default-inflation-restructuring-etc-etc has been negotiated, then it is still going to be a bit tense.

Not an answer really, but I've opted to take up some of the spp, having bought a few to have access to it.

Quote:

---

Originally Posted by Lizard

Hi Corlemar,

If HNZ survives, then a 5% discount to todays price will probably be a very good deal and spp holders should opt for whatever they can afford. There's a strong chance they'll survive, but until the rate of overdues and impairments shows more signs of slowing and the liquidity constraints around the govt guarantee and the general attitude of investors in the new age of deleveraging-by-default-inflation-restructuring-etc-etc has been negotiated, then it is still going to be a bit tense.

Not an answer really, but I've opted to take up some of the spp, having bought a few to have access to it.

---

Thanks for the informative advice.....will most likely take up some !

Quote:

---

Originally Posted by corlemar

Thanks for the informative advice.....will most likely take up some !

---

hey liz, following on from the info you previously gave, and after looking at the prospectus for the SPP, it looks as though HNZ could influence, ultimately the offer price of the SPP, by simply extending the closing date. For example if they felt the average closing price was going to be too low, say $0.55 or lower (this as we know is substantially lower than what the institutions are paying $0.75) why not extend the closing date to bring them more in line ??

I guess what i'm getting at is, why in the offer document is there an option to extend the closing date, if as we know it is fully underwritten by an institution (should small investors not snap up the $35m SPP)....Perhaps I'm over complicating matters though would be interested in anyone's comments !!

As I read it, the extension date exists mostly in order to tie the allotment of the spp in with the purchase of PWF becoming unconditional. The spp documentation was issued before the approval meetings of the PGW stakeholders and remains dependent on the timing of the NZ Treasury issuing the revisions to guarantee documents. Provided the Treasury side completes this week, I can't see them needing to extend.

I doubt very much that they would try to extend to get a higher share price, as it is more likely that any delays/extension would result in the share price falling rather than rising.

Quote:

---

Originally Posted by Lizard

As I read it, the extension date exists mostly in order to tie the allotment of the spp in with the purchase of PWF becoming unconditional. The spp documentation was issued before the approval meetings of the PGW stakeholders and remains dependent on the timing of the NZ Treasury issuing the revisions to guarantee documents. Provided the Treasury side completes this week, I can't see them needing to extend.

I doubt very much that they would try to extend to get a higher share price, as it is more likely that any delays/extension would result in the share price falling rather than rising.

---

I agree with you Lizard. The underwriters would not be happy with an extension as they will be keen to get as many as they can for as cheaply as they can.

What happens to the share price once the new shares are allotted? Although the shareholding is diluted there is also a capital infusion, so unlike a bonus issue does the share price stay more-or-less the same? I ask because I currently can not spare the minimum $2.5K to purchase any more shares so wonder whether I should dispose of what I have if the price will drop further once the issue is complete.

Quote:

---

Originally Posted by spmcg;355112I

ask because I currently can not spare the minimum $2.5K to purchase any more shares so wonder whether I should dispose of what I have if the price will drop further once the issue is complete.

---

The shares are already "ex-SPP", so the market should have taken a rough approximation of the extra shares to be issued into account. At lest $20m of the $50m worth of the shares will be issued at higher prices (75cps to PGC/PGW) and possibly the underwriter will be paying 65cps as well.

The shares might fall further, but I doubt it will be due to the SPP issue, just market uncertainty. There may be a small amount of selling at above the SPP price once shares are alloted, but in general, I would expect prices to improve slightly.

Quote:

---

Originally Posted by Lizard

The shares might fall further, but I doubt it will be due to the SPP issue, just market uncertainty. There may be a small amount of selling at above the SPP price once shares are alloted, but in general, I would expect prices to improve slightly.

---

Thanks, that makes sense.

Quote:

---

Originally Posted by spmcg

Thanks, that makes sense.

---

Why worry about the share price in the short term. More importantly, what are the earnings per share likely to be in a year or 2 or 3? What return would you expect on a 90c NTA (shareholder funds) per share in normal trading conditions? Hellaby have just produced a 25% return on their shareholder funds!! Admittedly there will be some dilution with this SPP.

Would someone like to explicitly tell me what the minimum rating required is to become a registered bank?

I can't see BBB- with negative outlook coming up to scratch in any shape or form

Perhaps this is why the downtrend in share price continues unabated.......

Hope that's not seen as a wee bit negative........would hate to upset the blue eyed brigade

Quote:

---

Originally Posted by Xerof

Would someone like to explicitly tell me what the minimum rating required is to become a registered bank?

I can't see BBB- with negative outlook coming up to scratch in any shape or form

Perhaps this is why the downtrend in share price continues unabated.......

Hope that's not seen as a wee bit negative........would hate to upset the blue eyed brigade

---

There is hope , The Bank of India was registered in NZ , March 31st 2011 , their current rating From Standard and Poors is BBB-

Falling share price might also be the dilution factor - the lower it goes, the more shares likely to be issued under the spp. Though they can't actually issue more than 90m that way, so there'd be a hitch if the potential issue price fell below 39cps (would require an extension for that to happen now)!

No word on Treasury approvals, nor extension of closing date, so not sure if timing is confirmed yet.

One thing that confuses me is the talk of bond offer - not sure how they would plan to place this given the current bid interest rate on the MAR010's is 8.75%. These have two years to run and the govt guarantee until Dec, with same or better security than current term deposits. Yet Heartland is only offering 6.0% for two year deposits (with guarantee until Dec). Makes it hard to see where they could price a bond that the market would eat - do we believe investment advisers would happily sell clients 3 year bonds at say 7%, yet aren't buying the current ones at 8.75% for their clients???

Quote:

---

Originally Posted by Xerof

Would someone like to explicitly tell me what the minimum rating required is to become a registered bank?

I can't see BBB- with negative outlook coming up to scratch in any shape or form

Perhaps this is why the downtrend in share price continues unabated.......

Hope that's not seen as a wee bit negative........would hate to upset the blue eyed brigade

---

I believe investment grade (BBB-) is the minimum. They will likely need to have the negative outlook removed. Being downgraded to BB+ would see their funding cost blow out and the systemic risk from that would surely be unacceptable to the the RB.

Am I correct in thinking that the average price for the last 5 days is 56c?

I thought it was $0.544.....no other method other than add end of day price and divide by 5 (trading days) this gives you I thought the end of day average price

Thanks Corlemar, if .544 is the average price then with the 5% discount we'll be getting shares at .526

Not bad considering some institutions will be paying 75cps

Whatever the final price of the SPP is determined at, it is certainly a good deal for small investors when you compare to PGW and PGC that are locked in for $10m each at $0.75c per share. That said, imo we have seen over the past several mths that both PGW and PGC have not made the wisest of decisions....it seems a big merry-go-round (but thats another story).

Although there is still some uncertainty about HNZ and what it can and will achieve, i personally think it will become a success story in years to come.

Quote:

---

Originally Posted by corlemar

Whatever the final price of the SPP is determined at, it is certainly a good deal for small investors when you compare to PGW and PGC that are locked in for $10m each at $0.75c per share. That said, imo we have seen over the past several mths that both PGW and PGC have not made the wisest of decisions....it seems a big merry-go-round (but thats another story).

Although there is still some uncertainty about HNZ and what it can and will achieve, i personally think it will become a success story in years to come.

---

lol, last smile is a beautful smile, wait to see.

Heartland New Zealand Limited ("Heartland") (NZX: HNZ) is pleased to announce
the price at which shares will be issued under its Share Purchase Plan
("SPP") has been fixed by the board at $0.522 per share.

Does anyone know, where or how you can find out what the take up was of the SPP ?

Quote:

---

Originally Posted by corlemar

Does anyone know, where or how you can find out what the take up was of the SPP ?

---

They will have to announce shortly - most likely tomorrow when the shares are supposed to be allotted.

Quote:

---

Originally Posted by Lizard

They will have to announce shortly - most likely tomorrow when the shares are supposed to be allotted.

---

Fascinating situation - the biggest disconnect we have seen in recent years with a public listed company between insiders being prepared to take up shares at a huge premium versus market price and SPP price.

So who is right and what kind of games are being played in the background?

Announcement out on NZX

A low take-up from existing holders, with only 15% putting in new funds, although probably understandable.

I thought this was a good entry opportunity for a new holder, and am pretty pleased to end up with a holding at an average entry of 53.5cps while NTA comes in at 83cps. All being well, they will trade at a good premium one day - just can't be too complacent as to the possibility that it occurs through NTA destruction rather than sp growth.

Quote:

---

Originally Posted by Lizard

The shares are already "ex-SPP", so the market should have taken a rough approximation of the extra shares to be issued into account. At lest $20m of the $50m worth of the shares will be issued at higher prices (75cps to PGC/PGW) and possibly the underwriter will be paying 65cps as well.

---

No, no no say it ain't so!

As a PGW shareholder I am feeling doubly shafted at selling the PGG Finance loans to Heartland at book value, then having to buy at 10% stake in Heartland at a big premium to market value.

You guys can speculate all you like about fair value for the Heartland-Not-Bank. PGW Chairman Sir John Anderson told we PGW shareholders that 'fair value' is 'book value' for non-bank financiers these days, if you are lucky. And the more cheap Heartland shares are sold, the lower the overall per share book value for PGW shareholders. Overall I have a schizoid reaction to what is going on.

From an industry observer perspective, we need Heartland to succeed. I wish all shareholders good luck.. You Heartland investors are heros, pushing back from the financial sector collapse to create a base for a new golden dawn of finance funding. This will see the true heartland of New Zealand captaining the economic recovery going forwards.

From a PGW shareholder perspective, I hope Heartland goes down. If that were to happen, PGW could unload $50m in loans for the Heartland receivers to deal with, the contractual defacto fall back position of the debt sales agreement. You existing Heartland shareholders are leeches on the financial fabric of New Zealand, frightening sound businesses to sell their loan books to you, even as you cream the stolen profits. I would like nothing better for today to be seen as a false dawn in the finance sector, with the heavy trampling boot of back banking debt facilities weighing on you before crushing you into the ground. You parasites! I hope you all do your dough.

SNOOPY

Quote:

---

Originally Posted by Joshuatree

Announcement out on NZX

---

This may seem a bit of a trivial point.....but the announcment states three big institutional shareholders will be PGC, Impact Capital and ACC. It does acknowledge that PGW will also be a shareholder, also noting the deal between the two entities. Yet I thought in accordance with the perspectus under the SPP both PGC and PGW will take $10m each, assuming this is still the case, are PGC taking more than $10m in HNZ?

Quote:

---

Originally Posted by corlemar

This may seem a bit of a trivial point.....but the announcment states three big institutional shareholders will be PGC, Impact Capital and ACC. It does acknowledge that PGW will also be a shareholder, also noting the deal between the two entities. Yet I thought in accordance with the perspectus under the SPP both PGC and PGW will take $10m each, assuming this is still the case, are PGC taking more than $10m in HNZ?

---

Perhaps the 10% subscription from PGW is not a commitment until all the 'i's are dotted and 't's crossed?

SNOOPY

Quote:

---

three big institutional shareholders will be PGC, Impact Capital and ACC

---

Really? Impact Capital is a $100 company formed in July 2011, specifically for this deal, I would surmise

Lets wait for the SSH notices before we say that it has three 'big' institutional shareholders. I'd put money on it that a lot of these shares end up in one of PGC's downstream entities, possibly that sinkhole for 'good' deals, Torchlight.

Quote:

---

Originally Posted by corlemar

This may seem a bit of a trivial point.....but the announcment states three big institutional shareholders will be PGC, Impact Capital and ACC. It does acknowledge that PGW will also be a shareholder, also noting the deal between the two entities. Yet I thought in accordance with the perspectus under the SPP both PGC and PGW will take $10m each, assuming this is still the case, are PGC taking more than $10m in HNZ?

---

PGC also had an underwriting commitment of up to $10m - of which it looks like they've ended up providing $6.53m.

Quote:

---

Originally Posted by Xerof

Really? Impact Capital is a $100 company formed in July 2011, specifically for this deal, I would surmise.

---

I'm kind of hoping that isn't linked to HNZ's liquidity update today where they say that liquidity has fallen due to increased lending activity...

Liz,

Mogridge states the underwritten shortfall and the committed $10mill are to be funded with 'bank' debt

Shareholders of PGC should ask him to be more specific.......

SSH Notice - (Harrogate Trustee Ltd)
4:16pm, 31 Aug 2011 | SSH

Disclosure of beginning to have substantial holding
Section 22, Securities Markets Act 1988

To: NZX
And: Heartland NZ Ltd
Date this disclosure made: 31 August 2011

Substantial security holder(s) giving disclosure

Name(s): Harrogate Trustee Ltd
Contact details: Graham Paull
(03) 377 0466
graham@alexanderpaull.co.nz
Date on which substantial security holder(s) began to have substantial holding: 31 August 2011

Summary of substantial holding to which disclosure relates

Class of listed voting securities: Ordinary shares
Summary for: Harrogate Trustee Ltd

For this disclosure,—

(a) total number held in class: 30,281,275
(b) total in class: 388,703,975
(c) total percentage held in class: 7.78%

SSH (Pyne Gould Corporation Limited)
3:22pm, 31 Aug 2011 | SSH

Disclosure of movement of 1% or more in substantial holding or change in nature of relevant interest or both
Sections 23 and 24, Securities Markets Act 1988
Relevant event being disclosed: Change in nature of relevant interest
Date of relevant event: 31 August 2011
To NZX Limited
And Heartland New Zealand Limited
Date this disclosure made: 31 August 2011
Date last disclosure made: N/A
Substantial security holder(s) giving disclosure
Name(s): Pyne Gould Corporation Limited
Contact details: Colin Hair, 027 877 188 colin.hair@pgc.co.nz
Summary of substantial holding to which disclosure relates
Class of listed voting securities: Ordinary Shares
Summary for Pyne Gould Corporation Limited
For this disclosure,—
(a) total number held in class: 23,381,685
(b) total in class: 388,703,975
(c) total percentage held in class: 6.02%

Ware Cassius ??..

I note one of the sub-underwriters walked away from their obligation. I hope shareholders will insist on management taking action to address this, or at the very least alleviate concerns over something smelly being brushed under the carpet, by informing the market what clause in the agreement allowed them to walk away.

If a sub-underwriter doesn't settle, I would have thought the primary underwriter would then be held to pick up the obligation anyway

Seems these directors are not keen to buy those “cheap” shares.

Why buy shares when you can simple give yourself shares at the end of the financial year for a job "well" done.

Quote:

---

Originally Posted by Master98

Seems these directors are not keen to buy those “cheap” shares.

---

Check again , looks to me like every director bar one, took up their full entitlement of $15k.

Quote:

---

Originally Posted by K1W1G0LD

Check again , looks to me like every director bar one, took up their full entitlement of $15k.

---

lol, just spent $15k!!!, if I were those rich directors and have confident in this company, I will spend at least $150k to buy these"cheap" shares.

Quote:

---

Originally Posted by Master98

lol, just spent $15k!!!, if I were those rich directors and have confident in this company, I will spend at least $150k to buy these"cheap" shares.

---

The maximum any one could take up in the SSP was $15,000.

Quote:

---

Originally Posted by Master98

lol, just spent $15k!!!, if I were those rich directors and have confident in this company, I will spend at least $150k to buy these"cheap" shares.

---

First you cannot read SSH notices and accuse the directors of not showing confidence.

Corrected, you then accuse them of not investing more - when they are only entitled like everyone else to $15,000.

If they invested more, you will accuse them of being given preferential treatment.

Just learn how to read before you write so you make some sense to yourself.

Quote:

---

Originally Posted by Balance

First you cannot read SSH notices and accuse the directors of not showing confidence.

Corrected, you then accuse them of not investing more - when they are only entitled like everyone else to $15,000.

If they invested more, you will accuse them of being given preferential treatment.

Just learn how to read before you write so you make some sense to yourself.

---

Balance, you must be very frustration of sp has fallen below SPP issue price, i reckon will hit to high 40c, i am quite happy bailed all my PGC holdings at 33c before share distribution:)

And the spin doctors still remain silent on why they have let one of the sub-underwriters off the hook - yet another related party or mate, I suppose.

I also note a good size loan has turned to custard already - I don't want to harp on about just how bad finance company lending has proven to be, but why anyone thinks Heartland is immune to loans default is completely beyond me.......maybe this constant talk of becoming a bank has fooled a lot of shareholders.

The shareprice is doing a lot of talking........

Quote:

---

Originally Posted by Xerof

maybe this constant talk of becoming a bank has fooled a lot of shareholders.

The shareprice is doing a lot of talking........

---

I agree with you, mate.