Loss of shareholder value in PNC
I have recently become aware of PNC through some research and noted the substantial loss of shareholder value during the tumultuous period between 2018 and 2021. It was intriguing as to the causes and it appears many shareholders through this period suffered substantial losses through both the decline in the share price, and dilution through issuance of performance shares to key PNC individuals and issuance of equity instruments to financiers.
In October 2019, Pioneer Credit Limited entered into a new AUD 225 million senior debt facility with a syndicate of lenders arranged by Carlyle, this transaction also included equity transactions.
In May 2020, Pioneer Credit Limited announced that it had received a notice from Carlyle regarding a potential event of default under its debt facility. The company stated that it was working with its lenders to address the issue and ensure compliance with its debt covenants.
In August 2020, Pioneer Credit Limited announced that it had refinanced its debt facilities with a Syndicate led by Nomura, resulting in an extension of its debt maturity profile and improved financial covenants. Nomura was granted ~15m Shares at $0 cost in consideration for providing the debt facility.
Reading the above in context with the substantial decline in Shareholder Value (>$100m lost value) this could be seen purely as misfortune related to Management of Debt Facilities and the impact of COVID-19.
However, taken in context with financial relationships between key individuals working for Carlyle and Nomura it could be interpreted as an effort by these key individuals and using their respective positions with each of Carlyle and Nomura to gain financial advantage and shareholding in Pioneer Credit. The key individuals in the competing financiers held co-investments in private companies (as detailed below) pre-dating their involvement with PNC which could be a potential conflict of interest. It appears that during this period these financiers held interest in or were issued PNC Shares/Equity instruments.
Everything provided here is accessible via ASX releases and publicly available ASIC searches and may or may not have been known to each of PNC, Carlyle and Nomura – there does not appear to be any public disclosure of these potential conflicts of interest which is a cause for concern.
Parties
- Pioneer Credit Ltd – ASX Listed entity
- David Tozer
o Tozer & Co Pty Ltd – Family Office
o T2 Capital Pty Ltd
- Carlyle / Tozer
o Robin BidCo Pty Ltd (BidCo) David Tozer & Ian Jackson (Carlyle) as directors
- Nomura
o Nomura Australia Limited (APRA Regulated AFSL Number: 246412)
o Stephen Allan – Managing Director - Nomura Australia Ltd
Potential conflict of interests
Some co-investments between parties and key individuals pre-dating & con-current with PNC/Carlyle/Nomura activity
– Tozer/Stephen Allan
o Tozer & related hold ~57.7% granted 31/08/2017
o Stephen Allan via Saref Investments hold 6.36% granted 31/08/2017
o Tozer & related hold ~25% granted 29/10/2018
o Stephen Allan via Saref Investments hold ~1.5% granted 16/03/2020
- Lancer Group Investments Pty Ltd (Hospitality Venture owning a number of Hotels:
o Tozer & related hold 25% granted 25/06/2021
o Stephen Allan via Saref Investments hold 25% granted 25/06/2021
- Barcoo (Nsw) Pty Ltd
o Tozer & related hold 25% granted 25/06/2021
o Stephen Allan via Saref Investments hold 25% granted 25/06/2021
As always DYOR
