PGC - Licenced to Bank

[Lizard]

Hi Percy,

I'd think there is a good basis in your NTA argument. BSH doesn't yet trade at NTA, but is likely to close the gap at FY11 result and start to exceed it post HY12. The only question is where NTA will be by then. No matter how much they've purged the books, the NTA on finance coys has not yet reversed its steady shrinkage.

Most of the PGW part is not a finance coy - simply a listed investment over which PGC have little control and for which you cannot control the value at which PGC will sell the shares. Other than the shares that can be presumed to be sold into the Agria bid, the remaining value should really be discounted to you due it being beyond your control.

PGC is also not a finance coy. A large chunk of the assets is in property which needs to be valued at a discount to NAV, if only because most property trusts are. Not to mention the possibility of impairments etc, given that the previous owners didn't manage a return on investment sufficient to pay the interest bills. The other half of PGC is a rather miscellaneous collection of unproven assets. With scale, they should exceed NTA, but without scale, the NTA is eroded by corporate costs. George Kerr may be all you say, but we have seen plenty of management heroes who later failed shareholder expectations. And while all the PGC strands in themselves might prove profitable, they still carry some significant corporate costs that may now be rather excessive to the size of remaining businesses. NTA will be important, but it might be the NTA of 12 months time that justifies the price - caution prevails.

[Lizard]

http://www.perpetual.co.nz/uploadGal...iew_%C6%92.pdf

This is an interesting read

Was it George or was it Torchlight that is owned by PGC that pumped in the $12m bridging finance .... seems a bit unclear to me

"Torchlight Fund no.1 LP"

Does LP stand for Limited Partnership - and if so, with whom? When I first read it, I just assumed it was the same entity as Torchlight GP 1 Ltd which is 100% owned by Torchlight Investment Group, which is 100% Perpetual etc, etc.

[percy]

Percy i hope that PGC does become George Kerr incorporated and isn't shuffled off to the side to be forgotten about. Don't count on the property loans as an extra source of income though. PGC are just managing the property and any cash realised from their sale will go back to MARAC and BSH.

I'm not sure what George Kerr can do with the Perpetual and the residual assets from PGW but here's hoping he has some financial trick up his sleeve.

PGC owns RECL who owns the impaired property.Like you I hope he has a NUMBER of tricks up his sleeve.

[percy]

Hi Percy,

I'd think there is a good basis in your NTA argument. BSH doesn't yet trade at NTA, but is likely to close the gap at FY11 result and start to exceed it post HY12. The only question is where NTA will be by then. No matter how much they've purged the books, the NTA on finance coys has not yet reversed its steady shrinkage.

Most of the PGW part is not a finance coy - simply a listed investment over which PGC have little control and for which you cannot control the value at which PGC will sell the shares. Other than the shares that can be presumed to be sold into the Agria bid, the remaining value should really be discounted to you due it being beyond your control.

PGC is also not a finance coy. A large chunk of the assets is in property which needs to be valued at a discount to NAV, if only because most property trusts are. Not to mention the possibility of impairments etc, given that the previous owners didn't manage a return on investment sufficient to pay the interest bills. The other half of PGC is a rather miscellaneous collection of unproven assets. With scale, they should exceed NTA, but without scale, the NTA is eroded by corporate costs. George Kerr may be all you say, but we have seen plenty of management heroes who later failed shareholder expectations. And while all the PGC strands in themselves might prove profitable, they still carry some significant corporate costs that may now be rather excessive to the size of remaining businesses. NTA will be important, but it might be the NTA of 12 months time that justifies the price - caution prevails.

Thanks Lizard,as always sage advice.George Kerr is the key.Whether he can walk on water or has trouble passing water time will tell.He has a history of making money,so no reason he should stop doing so now,but whether he wants a listed company as his vehicle or not has to be seen.The NAV of the impaired property is a concern.Every meeting I have been to, we have been told there will be no further write downs,only for further write downs to be made.So would be silly of me to comment.Corporate costs should not be a major concern as Kerr has always run a lean operation.He does not need hanger ons or consultants,he is the deal maker.
caution prevails. Certainly does.

[percy]

http://www.perpetual.co.nz/uploadGal...iew_%C6%92.pdf

This is an interesting read

Was it George or was it Torchlight that is owned by PGC that pumped in the $12m bridging finance .... seems a bit unclear to me

Thanks for the link.I take it as Torchlight.Loved the statement "Torchlight Fund No.1 LP provided $12mil as a bridge facility via the issuance by EPIC of a subordinated convertible note",
No free lunch with George.The customer always pays,and pays,then pays a bit more.Love it.!!!1

[winner69]

Thanks for the link.I take it as Torchlight.Loved the statement "Torchlight Fund No.1 LP provided $12mil as a bridge facility via the issuance by EPIC of a subordinated convertible note",
No free lunch with George.The customer always pays,and pays,then pays a bit more.Love it.!!!1

Thats why I think their is Torchlight and another Torchlight that is Georges ... maybe completely wrong but things are not all that clear when you look at the inititials and the letters after the word Torchlight

[percy]

Thats why I think their is Torchlight and another Torchlight that is Georges ... maybe completely wrong but things are not all that clear when you look at the inititials and the letters after the word Torchlight

I would think there are a number of Torchlight Funds,No1 to No.100,just hope they all pay management fees to PGC.

[ETC]

PGC owns RECL who owns the impaired property.Like you I hope he has a NUMBER of tricks up his sleeve.

Huh, thanks for that percy. I just assumed that PGC were managing the loans. Is that what the 27 million P Note is for payment for the property in RECL?

[winner69]

I would think there are a number of Torchlight Funds,No1 to No.100,just hope they all pay management fees to PGC.

So its all one big money go round then ... moving money from one shoebox to another shoebox that has got a bit empty and charge a fee for doing it as well .... sounds kosher .... haven't we recently heard all this before.

There was a story about this in the NBR a few weeks ago that suggested that George was the one who lent the money to EPIC and the writer than pointed out that George has almost put back the $18m he got paid for it back into it ..... so god only knows what is going on

[Lizard]

According to the register of Limited Partnerships at the companies office, Torchlight Fund No.1 GP is the General Partner in the limited partnership. Though the Limited Partners (as always) are not disclosed and could be one or several. Possibly just a tax-efficient structure for George's high wealth investors.