http://www.stocknessmonster.com/news...=NZSE&N=170771
What an interesting day to choose to announce that they are applying for a licence to become a specialist NZ Bank!
What are the benefits for PGC and why would they do this?
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http://www.stocknessmonster.com/news...=NZSE&N=170771
What an interesting day to choose to announce that they are applying for a licence to become a specialist NZ Bank!
What are the benefits for PGC and why would they do this?
The benefits might be: the ability to call oneself a bank, participation in the settlements system, liquidity line with RBNZ via repos for certain assets, ability to offer check accounts,
Downside is a minimum level of capital, RBNZ regulatory oversight, rigid capital levels ( RBNZ is the most inflexible of all the central banks on regulatory capital types)
Note that in NZ bank deposits are not guaranteed by the government. Having said that wiould the NZ government allow a major bank to fail. See BNZ
cheaper funding costs, punters get more confidence ...
M/D Brian Jolliffe comes with a distinguished banking background. Perhaps life at PGC is becoming a little boring!
Are they looking to use the PGG Wrightson connection to compete for farmers' business?
ON the surface it sounds a good idea and NZ needs its own banks as not to many details
are forthcoming time will TELL..
Attempting to head in the right direction - probably on the back of opportunity for Marac under the GG.
Just checked their investment rates and if my memory of a week ago is correct, I think they have already dropped the 18 month rate by about 1.5%, so it seems they are feeling confident (South Canterbury still offering about 2% more on 18 mth investment)
PGW makes up about 1/3rd of s.p. and recent profits though, so will also have a hefty influence on where the s.p. goes.
Couldn't understand why the market's initial reaction to today's restructuring announcement was to mark the shares UP! But then, after the detail had been digested, reality set in and the sp dropped away. A further hefty write-down of property loans and a cash issue - at no doubt a hefty discount - is hardly the sort of news that is share price enhancing.
The George Kerr development is an interesting one though. I actually hold shares in the unlisted EPIC No. 1 which is a PIE entity set up by Kerr to acquire, via Macquarie Bank entities, a small indirect interest in Thames Water in the UK. The holding structure is quite convoluted, as one would expect with Macquarie, but the tax-effectiveness means that the dividend yield is around 15%. EPIC has also recently acquired, again via Macquarie, a 17% interest in Moto, a UK motorway services area operator; those who have travelled on British motorways will know how exhorbitant the prices are when one stops for a coffee and sandwich at these monopolistic spots.
Kerr must be optimistic that he can use his network to raise funds to finance these toxic assets of MARAC's. In addition to his Macquarie connections he has been involved in a London based global hedge fund and was Chairman of Brook Asset Management from its inception until it was taken over by Macquaries. And, of course, he is also part of the Canterbury "establishment" - First Four Ships, Christs College, and all that!
Setting the price at which the toxic assets are transferred into the "Bad Bank" will be pivotal to this whole exercise.
Front end loading and related party loans.
Who the hell would participate in this company's capital raising and/or buy its shares?
http://www.nzherald.co.nz/business/n...ectid=10586446
ps: PGC simply put cannot afford PGW at current market cap with PGW's debt @ $450m.
I agree with your sentiments, good Doctor. And that's an incisive article by Brian Gaynor - it should be required reading for anyone with an interest - or contemplating an interest - in the Pyne Gould Guinness Wrightson octopus.
Unbelievably the PGC sp rose again on Friday - demonstrating that there are a lot of "old school" moneyed people in Canterbury who just seem to have blind faith in this "establishment" icon.
Doesn't seem to add up does it Colin
here's Marac meant to be one of NZ's strongest finance house having at least $160m of impaired loans (toxic according to one commenatator) which is more than 10% of their total assets ..... and the last Marac accounts showed equity at $130m so writing these off leaves Marac essentially broke .... no wonder the hinky dory financial jiggery pokery is needed
No doubt Ker et al are pretty clever guys but ......
Looks like these $160m loans that are likely to be or are impaired are staying in the PGC group .... PGC equity is $260m ... market cap is $170m ..... hell some capital will need to be raised somewhere
Have they been keeping up with their continuous disclosures on the increasing size of the impaired loans?
Last mention was at PGC half year when PGC set aside $25m for underwriting Marac property loans .... but problem abviously a bit worse than that
Of note in the stiff they announced the other day they said that the property loans needed to managed by a 'patient' investor which sort of said that heck it might take years to get our money back but we will eventually
As for disclosure I would have thought something before know as $160m of impaired or could become impaired loans is a hell of lot ... relative to the total loans and equity of both marac and the parent company
The bench mark thinking of these finance companies should be, once the % sectors of their loan book are disclosed how many of these sectors,
1) Would be underwriten by a reputable share broker at the share brokers due dillegent valuation if those sectors would be floated off.
2) How many of those "floats" would be over subscribed
In this present market most of the loan valuations should be written down to "receivers valuations" imho.!
Interesting article on stuff as PGC shareprice rises off its lows
http://www.stuff.co.nz/business/indu...of-uncertainty
So the prospect of a capital raising is a problem for the shareprice
and
.........rumours in the market that Mr Kerr and PGG Wrightson director and former chairman Craig Norgate did not get on.
and
Pyne Gould was a tightly held company with shares often owned by inactive investors or family estates, Mr Williamson said.
"Of course a lot of those estates won't have available funds to take up their share if they're asked to help fund [a capital raising].
"I think you'll find Perpetual Trust handle a lot of [the] estates."
(my comment) isn't Perpetual Trustees PGC owned ... so the Trustee of Marac ... and prob the old farming family estates holding PGC shares ... all sounds a bit incesteous (end of my comment)
and
Mr Ott said it was hard to judge any issues related to the timing of disclosure about the property loans.
Comment from Chris Lee regarding liability of Trustees in finance company collapses:
If Perpetual Trust, owned by Pyne Gould Corporation, has not provided for the potential cost of defending itself (and possibly losing) then in my view it has erred. We need these issues resolved in court.
Any thoughts?
Sounds expensive if anybody does sue them .... it sounds like that they (and others) were pretty lax in their trusteeship
It also seems a bit incesteous that Marac can use Perpetual to be their trustee to keep an eye on the business ... its like little brother seeing that big brother doesn't get into trouble ..... where's the independence of the Trustee in this case.
But it looks like the big boys can get away with these sort of things eh
DTB: welcome to ST discussions, as i notice it's your first logged post.
You have raised an important point (tho i doubt the wisdom of rushing off for a Court determination as a first strategy).
I agree with W69's comment above. It seems so obvious that Perpetual cannot possibly be an independent trustee in relation to Marac when each is owned by the same uber-entity, that we have to wonder what they are all up to, and why they might think we are all so stupid they think they will get away with it. Want to bet on yet another infestation of so-called "chinese" walls as an excuse for imminent transparent roguery?
PGC down to all time low (I think) at 140 .... with buyesr at 130
Some weekend press around EPIC and other associated Kerr / PGC activities and a few getting a bit touchy
I might even toss him a bit, W69, for the Moto investment.
However, financing Marac's bad debts would be another matter.
(Incidentally, I think you made some comment on some thread, a week or two ago, about all the investing fun we had in the early 80's, after Roger Douglas threw the doors and windows wide open. It prompted me to dig out my old Investments Register, for a nostalgic trip. What a list! Remember names like Prorada Properties, Omnicorp, Impala Pacific, Renouf, Rainbow Properties (turned $2,500 into $6,845 in one month on those, and I don't think they had even bought any properties by then!), something called Cashcorp Holdings(can't remember what they did, and they probably didn't know either!), another called Further Developments Ltd (!!!!!), and so the list goes on. (And I had completely forgotten that in those days I had held shares in NZ Oil & Gas, Cue, and Kupe. ) Great days. And then it all turned to custard - I think BIL was my greatest loss.)
Sounds like an opportunity not be missed - esp for the retail investor
http://www.nbr.co.nz/article/pgc-ass...vestors-107326
It was a week or so now but the Sunday Star times had a couple of stories about all the shuffling around of assets .... and that that EPIC fund seemed to have management fees etc .... and that no doubt quite a bit of cpaital would need to be raised and all that of stuff
Fridays close of 137 is pretty low isn't it... makes the market cap of the whole shooting match a miserly $127m ... not much for the company that owns one of NZ strongest (so they say) finance companies eh
Geez wayne ... down to 115
Even the press have noticed
http://www.stuff.co.nz/business/mark...on-uncertainty
Like the bit ......analyst said the company's future had been clouded by uncertainty but that the financial pressure PGC was under might have been over- played.
Wonder where the uncertainty came from?
Talk of an issue of 200 million new shares and offer shareholders the opportunity to buy two new shares for each share held, at a price of 80c a share.
Press getting stuck into PGC again .... probably totally uninformed and making up stuff that doesn't really exist
However a good old stoush in the boardroom is often a good thing
Maybe part of Kerrs big plan to get control of the lot .... first of all get rid of those old fashioned buggers on the board.
Would have to be a bit worried if this was really Kerr's intent (though it seems to be if his carry on with the EPIC funds is anything to go on) - (quote) It is understood he sees PGC aggressively pursuing the success of fund management firms like Sydney-based Macquarie Group, nicknamed "the millionaires' factory".
Geez Mr Kerr - even Macquaries have admitted that the Macquarie Model is broke
Never mind ... maybe this guy Kerr is cleverer than Macquaries
PGC board split on future direction
http://www.stuff.co.nz/business/mark...ture-direction
So the press were making stuff up gain ..... naughty naughty
]Pyne Gould Corporation (PGC) said that a report in the Christchurch Press today (14.09.09) citing unnamed market sources was completely inaccurate.
PGC chairman, Mr Sam Maling, said: "To suggest there is a split in the board could not be further from the truth. The Board is 100% united."
I just love 100% united boards .... but I have that feeling the unnamed market sources probably are right .... even if only a little bit right
Are you an 'unanmed market source'?
As the NBR points out PGC getting quicker and quicker to clamp down on press speculation
PGC are their own worst enemy - as the NBR also points out they have been reluctant to confirm or deny much lately
To you press guys .... keep it up ... must be more informed sources out there to get some juicy bits
Would have been funny (or not so funny) for Sam this morning ..... on to his way to work and his mobile rings with all his mates supporting him ... a few ringing him to find out if it was true ... and i wonder what Kerr said ... ha ha
Whatever - methinks it all going to end in tears for the small shareholder - inlcuding all those estates and trust money that has been invested in this lot
A good old stoush of new thinking taking over the old guard - no doubt set in their ways --- good stuff - let the bell ring for round 3 ... or is it round 4
Anyway the NBR bit
PGC denies a schism in its board
Robert Smith | Monday September 14 2009 - 11:56am
While there has been no shortage of rumours and whispers around the future of Pyne Gould Corporation, it has still been quick to clamp down on any media reports that go outside the company line with two rebuttals in two weeks.
After an earlier statement regarding an underwriter for its capital raising two weeks ago, Pyne Gould has now denied its board is split between “old guard” directors and director George Kerr.
This morning it said a report in today’s Christchurch Press, claiming a split in the board was “completely inaccurate”.
Chairman Sam Maling said the claim in the article that director George Kerr was driving the company in a direction that could conflict with other board members “could not be further from the truth” and that the board was “100% united."
The company was a lot faster refuting this claim than it was two weeks ago when it denied another Fairfax report that an underwriter had been found for the company’s upcoming capital raising needed to fund subsidiary Marac’s transformation into a bank.
That clarification came two days after the article was published and saw the NZX ask PGC for an explanation for the spike seen in its share price on the day before it corrected the report.
This time it only took a couple of hours to deny the media claim, although its share price was still heading in a familiar direction this morning, down 3c to $1.06 by 11.30am.
PGC has been reluctant to confirm or deny much else as it prepares the capital raising, although an update from the company is expected later this month.
Winner, PGC has repeatedly stated that PAM's assets are EPAM (previously owned by Kerr) and Torchlight.
It doesn't take much to find that Torchlight is owned by Kerr.
PGC should be careful if they intend playing a shell game.
The Rights Offer to eligible shareholders of PGC forms a major part of the capital raising being undertaken by the Company and is fully underwritten by First NZ Capital Securities Limited. The Rights Offer allows all eligible shareholders to subscribe for 6 new shares for every 1 share held on the record date, at a subscription price of $0.40 per new share. Immediately following completion of the Rights Offer it is proposed between $15 million and $30 million will be raised through a separate placement to institutional and habitual investors, including non-broker sub-underwriters of the Rights Offer. PGC also intends to launch a Share Purchase Plan upon closing of the proposed placement, under which existing shareholders will be entitled to apply for up to $5,000 worth of additional shares.
Key Dates
The key dates* for the Rights Offer are:
• Record date to determine entitlements under rights issue and share purchase plan - Wednesday, 30 September 2009
• Rights trading commences on the NZSX – Thursday, 1 October 2009
• Rights trading ceases on NZSX (close of trading) – Thursday, 15 October 2009
• Rights Offer closes (last day for receipt of Entitlement and Acceptance Forms) (5.00pm) – Monday, 19 October 2009
• Allotment of new shares under the Rights Offer – by Tuesday, 27 October 2009
• Settlement and allotment of the placement –Wednesday, 28 October 2009
Can someone convince me why I should buy some PGC during the rights issue?
I cant seem to find any good reason to buy this stock.
disc: not a shareholder
"Having put the new management team in place, immediately after the capital
raising is complete, the directors intend to undertake a review of the
Board's composition, as well as the composition of the board of MARAC."
Surely this has nothing to do with the earlier press??
Wonder what it's going to result in......
I wonder why theres no shortfall or over subscription facility?
Combined with such a huge ratio (for every share held, $2.4 is required to take up all the associated rights - surely impossible for many at the moment) it guarantees a large number of shares won't be taken up in the rights offer.
Guess it makes it easier for Kerr to top up cheaply. Would have thought that First NZ would want to limit their risk though.
Why no comments recently? For example South Canterbury Finance have indicated that they are now talking about bringing in cash from other investors. Hence no public float. Is Pyne Gould involved? Would SCF and Pyne make a good mix, would they be certain to get a Bank License if takenover.
Plus what is happening now? Is Pyne in profit yet, are most problems behind them? News and Gossip welcome.
Friendly rivals.Hubard helped kerr out when no one else would.Kerr now returning the favour.
At the AGM said pgc had enough on their plate without having to sort out South Canterbury. Banking License is on track but will take a little time.Will mean they pay less for money.
I think we will start getting progress updates shortly. I would think Marac is trading well.The PGW investment should start to show capital growth and new people Kerr has brought in will want to prove their worth.
Mouse, note that most of the posters were very negative on PGC so they missed out big time on investing during the rights issue. That's why there's no comments - there are few shareholders.
If you want to know what's happening - just follow the insiders and directors. They are buying and paying higher and higher prices for their increased shareholdings.
The last lot that the two Georges (Kerr & Gould) bought was at 50 cents from SCF.
Watch some of the posters screaming insider trading in 6 months' time when the share price goes up much higher. Same posters will not buy now at 48c or 49c - below where the directors paid!
PGC is now in the top 50 index.
This came alot earlier than expected.
I bought 40,000 PGC and am now in profit. So I am quite happy. I could not understand how people would refuse to invest in a finance company that had its cash raising fully underwritten. PGC were clearly going to become a major player in the finance field, particularly with so many companies going belly up. I think that with George Kerr having so much cash in the company that we must even get a dividend of at least 1 cent or even more this year. In a couple of years the shares could even be worth 80 cents.
Mouse.Hang on for the ride.At the AGM kerr spoke of how when times were good the market valued finance compnnies at twice their NTA,and when times were tough at or under nta.
PGC NTA at present 61cents or there about.He also stated he needed the dividend.
As you said PGC will clearly going to become a major player in the finance field.
:) I went to the special meeting today in Christchurch to eat sausage rolls and get info. First, there were no sausage rolls. This is quite sad. Had to eat sandwiches instead. They should have sausage rolls. How can you have any meeting of shareholders without sausage rolls? :mellow:
No dividend for the financial year ending June this year. However, a good prospect of one next year. So Percy, not just Pike but Pyne are no cash. Spoke to Sam Maling. He said that no dividend was affecting the share price. Hence low level. Sam did say he thought that Pyne is a $2.00 stock. Within the next couple of years.
I also spoke to The Press Business Editor who was there. She said that Pyne now have a very good board. So that is some cause for optimism. :)
mouse.
11am meetings no. 4pm friday afternoon is when the good wine and tucker comes out.I found Sam Maling good to talk to, Straight shooter,I will miss his good way of running a meeting.
Years ago I went to AGM and there was darn near three cheers for the chairman when he announced an increase in divie. That was Sir Miles Warren He was a good chairman also.
I think we will slowly see things happen and as you found out divie will get the SP moving.Strong board,strong balance sheet,good staff, mouse, thanks for reporting and going to the meeting.
I am flat out at present so didnot get to the meeting.
PGC set to roll over loan to SCF
By MARTA STEEMAN - The Press Last updated 05:00 05/03/2010
Pyne Gould Corporation cornerstone shareholder George Kerr is prepared to renew the $75 million loan to South Canterbury Finance – "all going well".
International ratings agency Standard and Poor's said this week SCF needs the continuing investment of debenture holders and other "liability stakeholders" when it announced SCF's credit rating downgrade to BB. PGC's Torchlight Credit Fund lent SCF $75m in October.
Mr Kerr, who chairs the Torchlight Credit Fund, said yesterday, after a special meeting of PGC, that the loan by Torchlight matured in May and "all going well we would like to extend it, assessing things are going down the right track".
Mr Kerr said SCF still needed to do significant restructuring and new chief executive Sandy Maier had seen clearly what to do, which was to consolidate the assets under one group, Southbury. Torchlight supported the strategy.
There were potential opportunities for Torchlight to offer SCF more liquidity from time to time and maybe buy some assets and/or provide debt that could convert to equity.
Mr Kerr said at the PGC annual meeting in October he regarded SCF as "friends". Torchlight had been set up to provide credit to stressed companies and had been busy. Mr Kerr would not reveal how many loans Torchlight had extended but SCF's was the first.
PGC's new Perpetual Asset Management (PAM) funds management business in its first six months contributed $1.9m in pre-tax earnings and much of PAM's earnings had come from Torchlight.
A shareholder at the PGC special meeting yesterday asked why Marac was getting out of property lending when everyone else was, creating opportunities in property.
Managing director Jeff Greenslade said property activities were being pursued in another part of the company. Marac's impaired loans had been placed with Real Estate Credit and that was being managed by Torchlight.
He said PGC wanted Marac focused on higher-quality lending. Marac was focused on establishing deep relationships with its customers, regaining an investment grade credit rating and securing a banking licence.
Asked about sharebroker Chris Lee's view of the formation of a South Island bank through the merger of SCF, Marac and other players, Mr Kerr said it was a reasonable idea, but he suggested that opportunities in the finance sector were part of Torchlight's domain.
========================
1/ Isn't Torchlight lending to stressed companies a significant risk, which could impact on the health of PGC as a whole?
2/ Why get involved in lending to SCF? Why take the risk? Is this 'related party' lending? What is gained by being "friends" with SCF?
3/ Why not steer clear of potentially high risk loans as a group....not just MARAC, but the whole of PGC as a totality. Surely PGC has learnt from past mistakes (?) and will not put the health of the company as risk again (?)
I think I'll sell off my PGC, for the following reasons:
1/ All these millionaires in Canterbury are a clique. PGC should be in competition with SCF, not propping them up. This should be about business, not about 'friends'. $75 million is a big chunk of money...too big in my book.
2/ Torchlight has been given a mandate to invest in 'distressed companies'. I'm not comfortable with that. The whole group could be crippled by another round of big impaired loans no matter how strongly the other parts of the business perform.
3/ MARAC is a tainted brand....it's not suitable to be turned into a bank, it's associated with bad & written-off loans. The banking industry is competetive in NZ, and we already have a local component in TSB and Kiwi Bank. I don't see that MARAC has much going for it.
4/ The recent saga's of the 'hidden loan' and the 'runaway chief risk officer' is another big blow to the credibility of MARAC.
I agree if uncomfortable it is a wise to get out.
I am very comfortable because;
1/clique yes you do not stand between them and a dollar.I have been friends with my competitors for years.they have helped me out and I have helped them out.good business.
2/warren Buffett and most wealthy people have invested in distressed companies.All to do with risk reward.
3/ MARAC is not tainted.remember when American Express nearly went broke.Buffett was at a restaraunt and saw customers using AE card ,brought the company and made a lot of money.
4/Hidden loan will allways happen in a financial company.donot sell westpac because some one had their fingers in the till.what is positive is new system picked it up.
Ok, so we should all invest in distressed finance companies. Sounds like a good idea. Did Warren Buffett chuck some money into Hanover when they were distressed?
I don't get the bit about being friends with competitors. Isn't the market about survival of the fittest? Or is this all 'keep your friends close and your enemies closer"?
What is negative is that the loan was very old and eventually had to come to light.
What's happening with the chief risk officer? His profile is still on the MARAC site.
Sean Kam was the chap who discovered the problem loan. I chatted to him after the special meeting and congratulated him on locating the problem loan. It appears the loan was very well hidden and required quite a bit of work to ferret it out. Sean is to be congratulated. As I said to him, 'you call it as you see it'. A bad loan is just that. Previous to talking to Sean I had spoken to another of the Marac chaps who mentioned the work Sean had done.
I dont care if the news is bad, what bothers me is when bad news goes through the mincer and becomes wonderful. Good luck to Pyne. I shall continue to hold.:)
Geez, I wonder who hid the loan? Was it one person or did others know about it? It was unauthorised aye?
LM
NO! NO! NO! A mine field.You have to be an expert.I was thinking of GPG looking at Hanover and walking away.Buffett brought bond in five mile nucular plant after it was shut down because he worked out they would still be paid out.
survival of the fittest.maybe but I have allways done better business through cooperation.It depends where you draw the line.
Yes it was a very old loan.
I would expect profile to be removed.
Mouse you sure spoke to a lot of people and learnt plenty.well done.
;)That is the whole point of going to meetings, isn't it. Not to listen to what is said on the record, but the refreshment discussions. Never leave early. Pity about the sausage rolls though.
I am pretty happy about Pyne. I was thinking of selling some of Pyne and buying more of Pike but have now changed my mind. I reckon Pyne will be in the money some time before Pike. Now I am satisfied with my holdings in both. 30,000 Pyne, about 6,000 in Pike plus any rights on offer that I can get this time round.:) I look on Pike as much more of a punt than Pyne.
Mouse.That i s the whole point of going to meetings.YES.You have taken good practice to an art form!!!!
We may never meet at any meetings.I will not answer to the name percy,and am not going around asking everyone if they are mouse.!!!!
I think you will feel better with your holdings from attending the meeting.
You have a good amount at stake so worthwhile keeping a close eye on it.
I remember the NZ railways. Cannot remember who owned them at the time. Lovely Annual Reports. Profit and dividends. A good investment. But I looked at the locomotives which were diesel and belching smoke as if they were steam trains as they went through Christchurch which is totally flat! I remembered the words of Brash Bonsall, my Bible School lecturer in England. "The Canadian Pacific railway got in trouble. It took then two locomotives to get the wagons up a small incline near my house. Then three locomotives. Then they went bankrupt". Same with our railway. They were belching smoke and went broke, I never put any cash in. You have to keep an eye on what is happening, as well as reading the reports. Many thanks for your encouragement Percy.
happy to hold.
What doesn't kill you makes you stronger.
After the near death experience, PGC is perfectly positioned to be a prime mover & shaker in the finance sector:
Strong balance sheet,
deep pocketed and well connected shareholders,
new management,
established presence,
government guarantee to get the funds required to expand,
business and commercial sector screaming for credit and prepared to offer security,
high margins
Meanwhile most of its competitors are buggered or are hated (the trading banks).
And the sp reflects the usual NZ 'wait until everything is clear' mentality.
Hold and will sell when sp is $5.05.
Be careful Balance,I have a feeling Mouse may unload a few at $4.99.Not sure what price Logen ninefingers would sell.Maybe he falls in love with it and will not sell under $6.00.As the old saying goes "we are well positioned for the upturn"!!!!!!
Balance - $5.00 per share? You must be talking looong term, or you're being a touch over-optimistic. I picked up 50000 during the recap. and would be totally beside myself if the price got to $5.00. Realistically, the only way PGC will get to $5.00 in the short/medium term is if they consolidate the shares ( a la NPX ) Long term - $5.00 would be nice. For the meantime, I feel quite comfortable/happy with my holding.
Isn't it curious how certain phrases seem to have currency from time to time.Quote:
What doesn't kill you makes you stronger
Why, only a couple of days ago columnist Alan Kohler was saying the same thing about the Greece/Europe relationship!
What's PGC competitive advantage over the other much larger and stronger banks? What covenants are in place to ensure that the promoters are not using PGC as their own piggy bank such as related party loans and moving their own assets at inflated valued into PGC?
With GE money and others pulling out on NZ and Aussie banks looking towards Asia there is plenty of market for MARAC.I would think every one is now inside the tent peeing out,rather than some outside the tent peeing in.ie Ker's interests are now via PGC.As for paying too much and covenants time will tell.What we must remember is Ker saved PGC,put his money on the line,and brought in good staff who wanted to work for him.These same people have also put their money on the line buying PGC shares.Directors and management have a lot of flesh on the line.
This was a huge capital raising,that was underwritten.From what I heard a lot of Ker's contacts missed out, as shareholder take up of the rights was surprising, so they invested in torchlight.
The board is very strong and as I have noted have a large shareholding.Gould has put up a huge amount of money taking his holding from I think under 1% to 5%.Ker has attracted this backing.
I will be frank,I think the Aussies regard NZ as backward.This opens the door to NZ bankers. Life goes on and people with good ideas will want to borrow money,this is a fact of life.Cars ,equipment ,business expansion ,all need a NZ bank or strong NZ finance company.In fact NZ needs NZders backing NZ growth.Ker and his team seem to understand risk/reward.Shareholders in PGC didnot walk away.As well as MARAC we will see growth in the areas Ker has brought in.He has a proven record of funds management.Torchlight will not be for the weak willed.We may see more on UK investments with Epic.A lot going on with experienced people brought in to manage them. I was impressed by bringingin george Gould and putting him on PGW board.He proved his worth with Reid Farmers PGG merger.AS we all know put in a good board ,attract good staff,have a strong balance sheet and the results will come.
Very surprised, Balance has, at last, found a company he approves of! Amazing. :eek2: Of course, I approve of Pike as well, but will hold my 30,000 in Pyne.
To the need for another Bank. I popped in to Kiwi Bank, ASB Bank, SBS Bank, etc, etc. I wanted to borrow $10,000 against my holdings in Pyne, Pike etc to buy more shares. Would give security over the existing shares plus the newly purchased shares. My holding at present is worth around $24,000.
The answer was NO, NO, NO, ETC. Besides raising very serious questions over the lending practices of the banks in question, we only lend on housing loans, and what happens when housing goes into a tailspin?, it emphasizes that there is space in the market for another NZ bank. Those we have here are on thin ice, only lending on housing.
Good luck to Marac. :)
Good luck to you, mouse, in getting a loan from "Marac Bank" to buy shares, in the event that Marac do indeed get a banking licence.
Personally, I don't think that your experience indicates that there is "space in the market for another NZ bank." Banks have traditionally been reluctant to lend for that purpose, or for other speculative purposes, for that matter. Apart from the difficulty in valuing the security ( Fortex? Feltex? Allied Farmers? ) there is the problem of risk weighting for capital adequacy purposes. A bank is able to lend against housing with a fraction of the capital required for loans for purchasing equities. That's a prudential requirement, not an individual bank policy matter. More new banks won't make any difference to that.
Go to Forsyth Barr's Leverage Equities and borrow from them based upon the security of your shares. They cost more as you would expect.
This is exactly the kind of business that Marac should get into - with proper risk management & prudential limits. Not stupid lending like the Aussie banks did, lending hundreds of millions to one single individual or to a group of individuals (eg. Babcock &Brown) but well spread over quality shares like Forsyth Barr's Leverage Equities. A few millions in profits each year - nice.
:confused:;)The principle of lending, as I understood it, is ability to pay and willingness to pay. So lending say 25% or 30% of a portfolio, with the ability to make a 'cash call' at any time seems to me to be far more secure than lending 90% of the questionable value of a house. What really worries me about our NZ banks is their blinkered view of lending. I remember I tried to get an overdraft from Kiwi Bank some years ago. They would approve $500.00 for my overdraft, no more. My worth was almost $1 million! In three properties. Two were freehold. Total madness from them of course, but you can see the funny side of it. A Marac Bank should clean up in NZ, the banks here need a bit of competition! :) Instead of getting an overdraft I made sure I never went into the red. :p
NZ is going backwards as a country in the global economy because of the lack of funding for businesses. The trading banks here are only interested in lending on mortgages - not businesses, as Mouse has noted. Even property development only happened because of the finance companies.
So opportunities to lend money to good businesses and good credit are plentiful.
Everyone can see the need for a major NZ bank. Marac needs to get it right and the main shareholders will be very careful to get it right - they have serious money at stake. Unlikely to let this one run away.
By all means have Marac focus on lending to business, but why put millions into 'Torchlight' - $75 million alone lent by Torchlight to SCF - for lending to distressed companies. I believe the investors who participated in the capital raising believed that the funds were going towards strengthening Marac with the aim of turning it into a bank. Did anyone believe that a very significant portion of the money raised would be going to something called Torchlight to help it prop up SCF?
I thought the money from the capital raising was required to give PGC/MARAC itself fresh capital.....is there now a spare $75million lying around that can be used to give SCF liquidity?
SCF is a company in very poor health; PGC should concentrate on getting it's own house in order & remain focussed on what it's aims are as they relate to it's own business.
ASB securities do allow margin lending for buying shares. Most of it is not 1 for 1, more around 70% of the current value of your shares, they also only do it on 30 -40 securities on NZX.
PGC did not lend Torchlight $75 mil. torchlight raised the funds separately.Ker has always said their focus was on getting their own house in order.I believe Torchlight ,s money has first right
before anyone else at SCF.The money raised in capital raising has gone where they said it was going.LN all this information has been avaliale in paper work and reports sent to shareholders.
Only new info is what Mouse found out and a lot is only confirmation of previous reports.
ASB was one of the banks I approached. No way was the answer. We only lend on housing. As Balance says, we need banks to lend on business ventures etc. As well as housing. But to put all of their loans into housing seems to me very poor business practice. Their fingers will long term get burnt. Since house prices can go into a tailspin so fast. A builder friend built the $1 million house. Market collapsed, house unsold. Mortgagee sale now. Repeated across NZ. Another friend borrowed for renovations then sale. Same result. Me? I have never failed to pay my debts, yet banks refuse to lend. They are missing good business and sound profits. Hopefully Marac will fill the gaping void in the market. I am sure they will. Good luck to them, and us.
LN - do note that it's Pepertual, a sub of PGC, which is involved in setting up Torchlight - not Marac. Nothing to do with Marac.
Torchlight is set up as a fund to invest in distressed assets with money coming from high net worth and professional investors - not from the capital raising!
Nice fees and market presence for Perpetual. PGC's exposure in Torchlight is a $15m line of credit which will be liquidated as funds are raised.
SCF is a company in poor health but amongst its assets are some quality ones. They are ripe for the picking and PGC is in the frontline to pluck them.
Torchlight's loan to SCF is 1st ranking priority fully secured - this loan gets repaid first before anybody else does. Looks pretty good to me.
Mouse. I enjoy reading your posts and like the fact that you are passionate about the things you have invested in. Too much passion can sometimes cloud ones judgement. Banks do lend to businesses. Due to the recent credit crunch, they have just tighten the noose. The time will come in the future where banks will start to lend like there is no tomorrow again and forget there was a financial market crash. If you have a good relationship with your bank they are more flexible.
Dont forget that high risk lending usually end up when tears with the market turns. The recent fall of finance companies is prove of the risk in lending to high risk ventures.
Take a look at this site.
Failed Bank List
http://www.fdic.gov/bank/individual/.../banklist.html
That's fair enough I guess, but other posters have said that Torchlight raised the money independently and I have no reason to dispute it. Where they got that information from, I don't know, but am happy to accept it. If everyone goes off, does all the research, & reaches the same conclusions, then I see no point in having a site like this. If by posting my own views I get information from other posters which contradicts me, I am happy to stand corrected. And I guess everyone who reads the posts by 'those in the know' will be better informed themselves.
I am not overly convinced that Torchlight raising the money independently necessarily translates into it being a good thing to prop up SCF to the tune of $75 million dollars, but I guess I'll get slammed by other posters on that too. The point I would make is that one part of the group being in trouble would impact on the group as a whole, so I don't know about Torchlight being considered some sort of seperate entity. But, if it all works out in the end, great.
Logan I have had a go at directors at AGMs and have asked questions,and have rung directors when i am unsure of things.I try to make positive statements and be helpful to all other posters.I do however spend a lot of time reading annual reports and make sure of my facts.I have had directors thanking me for my well informed questions and have found directors only to happy to speak to me either at meetings or on the phone.I am sorry I sometimes find it hard to express myself.Well here goes.
Should either of us put money in an at risk company I am sure we would loose it.Ker and the likes KNOW the RISKS and make sure of the security backing any loan made.That is their career.They make sure of the security and are first in line for repayment while you and me would miss out,torchlight and epic are funds that perpectual run.should they go bust there would be little effect on PGC.
LOGAN read,read ,read.then ask.
You expressed yourself well. My apologies for the uninformed posts; will endeavour to do more reading.
:mellow:Many thanks Silverlight. Fees are a bit too high for me, but useful information. The next question is why their lending people did not know. Quite appalling really. Another reason why Marac Bank could do rather well.
What bothers me a lot is the Lemming-like policies of NZ business. All lend or few lend. The old system of bank managers who knew their customers was in my opinion far superior to a call centre in The Phillipines. Hopefully Marac will be old school.:)
Means bugger all. Everyone knows about US banks falling over - even the biggest had to be rescued.
What is important is to now pick the ones who are going to survive, prosper and then invest.
Westpac Bank nearly went broke in the early 1990s. It had to be recapitalised just like PGC. Kerry Packer was involved from memory.
Share price got down to $3.00 and today it is $35.00 and it has paid a dividend every year.
Those who were brave and bought then are enjoying a dividend yield of over 35% pa.
PGC MARAC mentioned www.chrislee.co.nz click on click here to enter,then go to market news,click on to that,then scroll down.
Torchlight in perspective :
Excerpt : "In another story, PGC's Torchlight Credit fund has announced it is willing to extend the $75m prior charge secured credit facility it granted the company in October, and offer the company further liquidity support by buying assets from it. This is likely to mean that this friendly vulture is considering buying senior tranches of SCF's loan book, leaving SCF with the highest risk tranches. This is how the company can turn first ranking positions into second ranking positions and get some cash in the door and keep the show on the road a little longer. Whether it will be advantageous to the SCF and its guarantor would be a different question."
PGC's game plan becomes clear. Clever huh?
:)This is a rather mysterious article. Which seems to indicate that SCF is woefully short of cash. The trouble is, I do not understand the figures or argument. Would someone please like to look at the article and attempt an explanation. I am sure it is not Gibberish, but what language it is I do not understand. :confused:
The real point to note here is that Touchlight has a first ranking priority fully secured security over ALL of the assets of SCF - $75m against $2.3 billion of assets.
Touchlight will only lose money if SCF loses $2.225 billion of assets first.
Not a snow ball's chance in hell.
Meanwhile, PGC gets to cherry pick SCF's best assets to add to its portfolio.
Bal---, Things at SCF must really really really have been in a sorry sorry state for them to agree to a loan of this type in the first place , I personally cant see that this was/is the realistic situation for this to be tha case,,, somethings not quite the case here, A H is just not that despirate to agree to these conditions.
Those are the facts.
Excerpt from Timaru Times 30 Oct 2009 :
"The $75 million Torchlight credit line, which has been fully drawn down, is likely to be relatively short term and possibly costing South Canterbury "double-digit interest" (more than 10%) as Pyne Gould "took its pound of flesh".
"There is a possibility Pyne's could take a stake in South Canterbury and make moves toward a merger or similar arrangement. They could see plenty of opportunity for an alignment."
He said "what may not be obvious" was the $75 million Torchlight fund had a "prior ranking charge", meaning the loan ranked ahead of all other obligations, including those to debenture and deposit holders.
"This prior ranking should offer a very high level of security to Torchlight," Mr McIntyre said.
Before taking on the Torchlight facility, South Canterbury had $34.1 million in existing prior ranking charges and now will have $109.1 million, with a capacity remaining of about $52 million, which the company could borrow against.
"Torchlight may well be the `fund of last resort'. But no-one else has stepped up to take the high ball," Mr McIntyre said.
Mr Kerr, in a statement for Torchlight Credit Fund, said "investments that are perceived to be too difficult for banks often create opportunities for fund managers. The fund has been established to focus on exactly this type of situation."
Amen.
Note recent size seller seems to have been dealt with. After pounding the price at 44/45c it has now bubbled up to 47c.
Sorry, I have tried to find a link to insert but cannot locate one. So it is in todays Press, Bruce McKay, page A12, South Canty Finance comment. The argument is basically that the Capital Adequacy is not 11.9%, rather it is 1.2%. If true, then SCF is in major trouble. But I cannot understand the article. Or the table. Help!