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Motor Trade Finances rebuffs Heartland approach, mulls meeting

Motor Trade Finances  [NZX:MTF], the Dunedin-based auto-finance firm, rejected a takeover offer from Heartland New Zealand [NZX: HNZ] earlier this year, and is warning its shareholders to be wary of any communication from the bank.

The finance company, which has a loan book of some $438 million, has been in talks with Heartland for a considerable period over a potential takeover bid, with an indicative offer made in May, which the board declined, MTF said in a statement. One of the reasons for turning down the bid was Heartland's request for information relating to a Commerce Commission prosecution currently under appeal, for which the bank wasn't prepared to enter into confidentiality agreements.

MTF says Heartland has now started engaging with some of its shareholders, and is warning its investors to treat any communications from the bank with caution "given that it is a competitor and potential acquirer of MTF."

Last week the finance company's board received a letter from shareholders with some 8.1 percent of the firm's voting rights seeking a special meeting to publicise information relating to the prosecution, which MTF says is effectively the same information Heartland sought.

MTF plans to meet with the shareholders to discuss what it says are some errors of fact, and will issue a notice of meeting as soon as practicable, it said.

The firm said it is happy to work with Heartland to find a proposal it considers has merit for shareholders.

MTF has $40 million of perpetual preference shares listed on NZX's debt market, which last traded at 68 cents in the dollar.

Earlier this year Heartland spent $87 million in cash and shares for the Seniors Money International home equity release firm.

Its shares fell 1 percent to 95 cents today, and have gained 13 percent this year.

(BusinessDesk)

Comments and questions
5

I see on the MTF website that they charge no more than$440. establishment fee and no more than$ 8 Account maintence fee per month.Why would you want to deal with these guys.

no different to other finance companies - UDC for example has $550 establishment fee. For higher risk loans Banks often charge several thousand dollars for set up fee.

What does the reserve bank have to say about very risky vehicle lending?
Great to see the taxpayers standing behind this idea...

gee - deal with the Dunedin based fellahs who staggered through the last 5 years, or sell your MTF shares to a growing registered bank who did well through the GFC, who have access to cheaper capital, the ability to cross-market, and high street locations.

This is a tough decision.

MTF has AAA credit rating Heartland BBB-. MTF shareholders all work in the business and share in the profits as well as receive dividends on their shares. MTF ordinary shares steadily rising in value, Heartlands are falling.