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  1. #1
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    Default PGC - Licenced to Bank

    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?

  2. #2
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    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

  3. #3
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    cheaper funding costs, punters get more confidence ...

  4. #4
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    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?

  5. #5
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    Lightbulb Bank..?

    ON the surface it sounds a good idea and NZ needs its own banks as not to many details
    are forthcoming time will TELL..

  6. #6
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    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.

  7. #7
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    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.

  8. #8
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    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.
    Last edited by Dr_Who; 25-07-2009 at 09:53 AM.
    Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt either directly by abolishing large slabs of it, or indirectly by inflating it away.

  9. #9
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    Quote Originally Posted by Dr_Who View Post
    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.

  10. #10
    Speedy Az winner69's Avatar
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    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 ......

  11. #11
    Speedy Az winner69's Avatar
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    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

  12. #12
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    Have they been keeping up with their continuous disclosures on the increasing size of the impaired loans?
    Death will be reality, Life is just an illusion.

  13. #13
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Steve View Post
    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

  14. #14
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    Exclamation

    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.!

  15. #15
    Speedy Az winner69's Avatar
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    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.
    Last edited by winner69; 05-08-2009 at 12:19 PM.

  16. #16
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    Quote Originally Posted by Dubdee View Post

    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
    Yes they are...

  17. #17
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    Quote Originally Posted by johndeyell View Post
    Yes they are...
    Correct. It's now a matter of how and when the govt extracts its G/-, from finance companies as well as banks. Watch what the Aust govt does for a lead in this regard.


  18. #18
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    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?

  19. #19
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    Quote Originally Posted by DTB View Post
    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?
    Chris who??

  20. #20
    Speedy Az winner69's Avatar
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    Quote Originally Posted by DTB View Post
    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

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