HGH - Heartland Group Holdings

[SCOTTY]

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.

[spmcg]

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.

[Lizard]

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.

[spmcg]

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.

[SCOTTY]

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.

[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

[K1W1G0LD]

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-

[Lizard]

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???

[Penfold]

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.

[ETC]

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