HGH - Heartland Group Holdings

[beetills]

So i presume they lend this money out.
Does this indicate that they have more borrowers than depositors funds and if so why didn't they have a much larger bond issue.

[Under Surveillance]

Subordinated unsecured convertible notes.
They are Tier 2 bond,a debt instrument,issued for a 10 year term.HBL can repay early,and under extreme circumstances the bond holders could convert their bonds to shares.
I have been expecting some form of bond issue for sometime.It is smaller than I would have hoped for.
However positive.

The HBL notice to NZX of 1:38pm referred to A$20M. An hour later, 2:47pm, another notice referred to A$30M. Could be A$50M by market close???

[iceman]

The HBL notice to NZX of 1:38pm referred to A$20M. An hour later, 2:47pm, another notice referred to A$30M. Could be A$50M by market close???

Umm, your are right the waiver announcements talks about up to A$30M whereas the offer announcement talks about A$20M !!

[percy]

So i presume they lend this money out.
Does this indicate that they have more borrowers than depositors funds and if so why didn't they have a much larger bond issue.

Yes they will lend the money out.
They are recognised as a form of capital.
Could be called "fake" capital...lol.

[Snoopy]

Umm, your are right the waiver announcements talks about up to A$30M whereas the offer announcement talks about A$20M !!

Here is the summary of the article from 'kanganews'.

http://www.kanganews.com/news/6638-h...small-tier-two

"Friday, 31 March 2017 Updated"

"New Zealand’s Heartland Bank (Heartland) (BBB from Fitch Ratings, with an expected issue rating of BBB-) placed a tier-two transaction in the Australian dollar market on 31 March. The deal had indicative volume of A$20 million (US$15.3 million) and price guidance of 415 basis points over bank bills for 10-year non-call five tenor."

So it looks like $A20m, or $NZ22.2 with $NZ1- = $A0.9. Of course should the exchange rate fall to $NZ1- = $A0.66, then the size of the bond issue will be $NZ30m ;-P

However, I guess the key term is 'indicative volume'. That would indicate that Heartland might be flexible about the amount of 'tier 2' money they are prepared to accept.

SNOOPY

.

[Snoopy]

We are getting to the end of FY2017 capital raising now, with just the DRP for the current dividend to go. But with the (surprising) 'increase in new capital' asked for from existing shareholders, and last years placement put to bed, here is my best update of the capital raised subsequent to Heartland being formed. This time I will leave out FY2012, because that capital raising was all about shoring up the company's position 'at birth', and was not part of any future growth initiatives. For comparison, I have added a column showing the dividends declared during the year, before any net cash reduction as a result of the dividend reinvestment plan.

Financial Year	New Shares Issued during FY	Total Shares on the Books EOFY	Net Money Raised During FY	Dividends Paid	ROE
2013	0 m	388.704m	$0m	$13.951m	7.2%
2014	75,562 m	463.266m	$64.774m	$19.930m	8.0%
2015	6,624 m	469.980m	$9.163m	$30.188m	9.9%
2016	6,579 m	476.469m	$6.798m	$37.690m	10.7%
2017	30.973m+	512.902+ m	$45.277m+	$39.485m (f)	tbc
Total Cash Raised			$126.012m +
Total Cash Returned				$141.244m

(f) indicates forecast result.

This shows that the sum of those shareholders who have taken up their dividends as DRP shares and contributed to the cash issues from FY2013 to FY2017 inclusive, the total sum contributed amounts to 89% of the dividends paid out. That figure is sure to rise to over 90% once the DRP contributions from this months dividend are added.

I didn't think my post would be outdated in just ten days. But with the announcement of today's (foreshadowed) capital raising in Australia for 'about $A20m', which at $NZ1= =$A0.909c is equivalent to $NZ22m, it is time to update the Heartland 'capital flow' table.

Financial Year	Capital Notes Issued during FY	New Shares Issued during FY	Total Shares on the Books EOFY	Net Money Raised During FY	Dividends Paid	ROE
2013	0 m	0 m	388.704m	$0m	$13.951m	7.2%
2014	0 m	75,562 m	463.266m	$64.774m	$19.930m	8.0%
2015	0 m	6,624 m	469.980m	$9.163m	$30.188m	9.9%
2016	0 m	6,579 m	476.469m	$6.798m	$37.690m	10.7%
2017	$22.000m (f)	30.973m+	512.902+ m	$45.277m+	$39.485m (f)	tbc
Total Cash Raised	$22.000m			$126.012m +
Total Cash Returned					$141.244m

(f) indicates forecast result.

The picture this table draws is truly astonishing. If you add up the amount of capital that stakeholders have put into the business over the last five years, it now exceeds the total dividend flow that Heartland has paid out over that same time period!

Put another way, those mother shareholders who put their capital into Heartland probably expected this 'growing baby' to suckle at the parent shareholders' teat, while it built up its strength to prosper as a fully fledged 'grown up' Company. However, this aggressive little Heartland pup clearly did not want to make that break with Mum and Dad shareholder investor. While apparently distributing a generous flow of dividends, the aggressive Heartland jaws subsequently latched back onto those shareholder funds again by way of DRPs and cash issues. And now, from a total stakeholder perspective (including the new Aussie bondholders) those aggressive jaws have not only sucked the stakeholders dry. They have taken a solid bite out of the teat that feeds it!

Plenty here have claimed over the years that Heartland was not 'short of capital'. At one stage even Heartland themselves talked about the possibility of a capital return. However, following a 'look at what I do ' method rather than the 'look at what I say' method of investment, it is now clear what Heartland's true capital appetite was. Heartland have been very clever to raise all of this new capital at what were largely premium prices. Kudos to Heartland management for that. But those stakeholders looking for a 'solid net dividend return' may have to pause for thought.

SNOOPY

[Beagle]

Put another way, those mother shareholders who put their capital into Heartland probably expected this 'growing baby' to suckle at the parent shareholders teat, while it built up its strength to prosper as a fully fledged 'grown up' Company. However, this aggressive little Heartland pup clearly didi not want to make that break with Mum and Dad shareholder investor. While apparently distributing a generous flow of dividends, the aggressive Heartland jaws subsequently latched back onto those shareholder funds again by way of DRPs and cash issues. And now, from a total stakeholder perspective (includin the new Aussie bondholders) those aggressive jaws have not only sucked the stakeholders dry. They have taken a solid bite out of the teat that feeds it!

LOL thanks for the amusement mate. Just a free heads-up for the new financial year starting tomorrow from one hound to another. Nobody cares ! Everyone loves a winner that's growing EPS more than the other banks and so as long as that's happening there's always new teats to suckle on All that matters is EPS is growing and their capital adequacy ratio is fine and there liquidity is also fine because if they need more money they simply tweak their deposit rates a bit.
"Its all about growth, growth and yes...you guessed it, more growth

[janner]

All that matters is EPS is growing and their capital adequacy ratio is fine and there liquidity is also fine because if they need more money they simply tweak their deposit rates a bit.
"Its all about growth, growth and yes...you guessed it, more growth

Correct Roger. There are still very many original investors happily holding and re-investing with the DRP. Watching the value of their shares
steadily but surely increase.

Growth ??... More power to their elbow IMO..

Disc. Original holder.

[trader_jackson]

https://nzx.com/companies/HBL/announcements/299276

Nice strike price... some say it is the last time one could get HBL shares at under $1.60

[Beagle]

https://nzx.com/companies/HBL/announcements/299276

Nice strike price... some say it is the last time one could get HBL shares at under $1.60

More icing on the cake after the SPP. Sweet