PGC
30/07/2012 17:04
ASSET
REL: 1704 HRS Pyne Gould Corporation Limited
ASSET: PGC: PGC Considers Offers for Perpetual Group
?Notice to NZX
30 July 2012
PGC Considers Offers for Perpetual Group
Pyne Gould Corporation ("PGC") Managing Director George Kerr announced today
that the company has received approaches from a number of parties wishing to
acquire all or part of the Perpetual Group (Perpetual) encompassing corporate
trust, personal trust and retail asset management.
"The Board of PGC accepts the merit of a complete separation, both of
governance and of ownership, between the retail focused Perpetual and the
wholesale focused Torchlight (Torchlight Investment Group).
"Accordingly, PGC is engaged with a number of parties with a view to
divesting the Perpetual businesses. No definitive agreements have been
reached as yet, and if and when this point is reached, PGC will make an
appropriate announcement to the market."
Core Business of PGC is then Torchlight
If all, or part, of Perpetual is divested, PGC intends to commit capital into
Torchlight to invest in and manage distressed assets. The core business of
PGC will then be Torchlight, Mr Kerr said.
"The changes signal the last stage in PGC's restructuring which began with a
rescue package in 2009.
"In 2008, I was asked by a concerned PGC board member to provide strategy and
capital to rescue PGC. This was not an easy task. PGC had committed 90
years of accumulated wealth to a flawed strategy highly geared to the finance
company sector. Marac was competing in the finance company sector, and
Perpetual Trust's growth strategy was to be the trustee for the finance
sector.
"Over 50 finance companies have failed since 2006. This is in stark contrast
to PGC's achievement in recapitalising Marac and creating Heartland New
Zealand Limited. PGW was recapitalised with our cornerstone support and,
later, PGW Finance became part of Heartland. Meanwhile Perpetual established
a new and successful family of retail funds outside Perpetual Trust.
"Perpetual also helped give birth to Torchlight in October 2009. Torchlight
grew from a $1.00 acquisition and a $15 million commitment by PGC to become a
substantial contributor to profitability by building a credit-based private
equity business in Sydney.
"Torchlight was one of the conditions of my support for the 2009 rights
issue. In late 2009, when Torchlight was born, the central idea was that the
hangover from the GFC would be long and painful. A severe bank crisis only
recovers by debt being amortised and that takes at least a decade.
Torchlight is growing by increasing exposure in sectors where banks are
reducing exposure. This is a strategy for those with patience. It is,
however, one we are very confident in.
"An inevitable outcome of this strategy is that PGC will have minimal, if
any, exposure to New Zealand. The only remaining assets of substance in New
Zealand are those held to meet PGC's obligations to Heartland.
"Torchlight's focus to date has been Australia but is now increasingly
focused on the United Kingdom. Accordingly, the Board of PGC has
commissioned its international legal and accounting advisors, Baker &
McKenzie and Deloitte, to evaluate the opportunity for PGC to list in either
or both Australia and the United Kingdom.
"PGC expect this analysis will take some weeks or months, but will update the
market once complete."
Financial Position and Investment Update
Mr Kerr said that when the takeover ended 100 days ago, PGC had debt of $22
million and modest cash flow.
"PGC today, as a result of asset sales and the growth of Torchlight, has
substantial cash, zero debt and positive cash flow.
"Of the proceeds of asset sales thus far, the $22 million of debt has been
paid down and slightly in excess of $10 million of Torchlight Fund LP
interests have been acquired from third parties using proceeds of Heartland
and PGW sales, with the balance held in cash available for future growth.
"Following the completion of the acquisition of Torchlight LP interests, PGC,
through Torchlight Investment Group, now holds approximately 17% of the
limited partnership interests on issue in the Torchlight Fund.
"We expect to continue to reinvest in Torchlight Fund No.1 LP and in the
development and establishment of other similar Torchlight Funds," Mr Kerr
said.
Further details of PGC's performance will be released with the full 2012
fiscal year's accounts on 31 August.
Contact: David Lewis 021 976 119
Communications
End CA:00225462 For:PGC Type:ASSET Time:2012-07-30 17:04:04
