HGH - Heartland Group Holdings

[Snow Leopard]

...At EOFY 2015 share equity was $480m. So that $70m raised is around 15% of the capital now on the books. Now why did HNZ have to raise such a large amount of capital? Because it wasn't prudent to further leverage their balance sheet to make the acquisitions they did without doing so. So not only does my claim of 25/11/2013 of Heartland being short of capital stand. It has proven to have been true!...

I am reminded of the story of the scientist who teaches a spider to jump on command.

He presents it to the world, "Jump" he says and the spider jumps.

He then pulls all the legs off the spider and says "Jump".

The spider does not move.

"I have just proved" says the scientist, "that a spiders ears are attached to their legs"

Best Wishes
Paper Tiger

You worked out the fallacy of a DRIP being new capital yet ?

[Snow Leopard]

...Now, moving onto the much talked about 'share capital return' to shareholders. I believe that consummate with this, Heartland are proposing to issue some Tier 1 bonds which will count as capital for reserve bank requirement purposes. The proposal then is not to reduce the capital of the bank. The proposal is to lower the share capital, and replace that with bond capital. IMO this makes this whole discussion of HBL having excess capital moot. The true picture is quite the contrary. Heartland freely issue new capital with their acquisitions, and there is no plan on the table to reduce overall capital on the books...

If the capital management happens and the actual details are announced then you may or may not be able to use it in evidence for your 'beliefs'.
The bonds would be Tier 2 capital by the way.

Anyway I am off round to percy's house to complain about him setting the dogs howling.
I may knock the head off his favourite garden gnome if he does not promise to mend his ways.

Best Wishes
Paper Tiger

[Snoopy]

Snoopy, I think your memory is being a little selective.

The full details were:
$20M cash from the issue of new shares (as above);
$37M of new shares (@ $0.90 each) as above;
and $28.3M from the 'very fully stretched balance sheet'.

Not sure of your point PT. Heartland issued new shares and borrowed money to make an acquisition. They used the new shares issued as collateral to borrow money to complete the purchase. Perfectly normal behaviour. Are you suggesting the Seniors Purchase could (should) have been fully debt funded?

As for the 'new' capital raised by the dividend reinvestment plan - I laugh in your general direction.

Granted the new capital from the DRP is peanuts in the scheme of things. But many peanuts eventually add up to a bag of peanuts. The purpose of a DRP is to raise capital is it not?

The 'fallacy' of the DRP deing new capital is explained under note 14 of the FY20145 financial statements. The $6.624m of new capital added to the books in FY2015 looks real to me.

SNOOPY

[Snoopy]

If the capital management happens and the actual details are announced then you may or may not be able to use it in evidence for your 'beliefs'.
The bonds would be Tier 2 capital by the way.

If the bonds are Tier 2 capital, that just means they have a higher discount factor when the overall capital of the company is considered.

'X' Tier 1 capital or 'X+20% (say)' Tier 2 capital? It makes no difference to the point.

SNOOPY

[percy]

If the capital management happens and the actual details are announced then you may or may not be able to use it in evidence for your 'beliefs'.
The bonds would be Tier 2 capital by the way.

Anyway I am off round to percy's house to complain about him setting the dogs howling.
I may knock the head off his favourite garden gnome if he does not promise to mend his ways.

Best Wishes
Paper Tiger

My apologies.......lol.
And thank you for your sterling efforts.
Whatever way we look at things ANZ,WBC,etc are having to go back to shareholders for more capital,while HBL have the capacity to return capital to us shareholders.

[aquaman]

Sorry for changing the discussion but does there not seem to be a pattern forming of continued top up of shares for sale at 122?

[Snow Leopard]

Not sure of your point PT....

My point is that your point that percy's point that your earlier point that Heartland were capitally challenged, was incorrect, was not incorrect and proven by later capital actions, was incorrect on a number points.

Best Wishes
Paper Tiger

[Snow Leopard]

...It makes no difference to the point...

Which point?

Best Wishes
Paper Tiger

[winner69]

Whatever way we look at things ANZ,WBC,etc are having to go back to shareholders for more capital,while HBL have the capacity to return capital to us shareholders.

You keep repeating this percy, but it does it actually mean anything?

ANZ et al have completely different "capital" structures and thus equity ratios. If Heartland had a similar structure they could will be 'going back to shareholders' as well

and when you think about it aren't Heartland heading down the path of having a capital structure like ANZ and the others?

[percy]

You keep repeating this percy, but it does it actually mean anything?

ANZ et al have completely different "capital" structures and thus equity ratios. If Heartland had a similar structure they could will be 'going back to shareholders' as well

and when you think about it aren't Heartland heading down the path of having a capital structure like ANZ and the others?

Means exactly what it says.