PGC repays bank debt of $22m from asset sales

BUSINESSDESK: Pyne Gould Corp, whose Perpetual Trust unit is being investigated by the market watchdog, will repay $22 million in bank debt after selling down the bulk of its stakes in Heartland New Zealand and PGG Wrightson last week.

The Auckland-based firm sold $8 million of stock in Heartland and $2 million of shares in Wrightson, on top of an earlier sell-down that reaped $15.4 million for Pyne Gould, it said in a statement after the close of trading yesterday.

The excess $3.4 million will be "available for other investments" and the company plans to give a strategy update this week.

Managing director George Kerr “will provide a statement on the investment strategy for the PGC Group this week", it said.

The adequacy of Pyne Gould's disclosure has come under scrutiny in recent weeks after the Perpetual unit came under a Financial Markets Authority probe over $28 million of loans to the Torchlight Fund No 1 LP, which is managed by Mr Kerr.

Pyne Gould said the share sales are not required to cover the outstanding balance of the loan between the Torchlight fund and the Perpetual Cash Management Fund, which Torchlight said will be prepaid by the end of July.

Perpetual froze repayments out of its mortgage fund last week after a surge of redemption requests and the cash management fund has been ordered to install two independent observers pending a substantive court hearing next month.

As at Friday, Torchlight's loan balance was less than 7.5% on a loan to value ratio of its net assets, and "comfortably covered by near term receivables", the company said.

Mr Kerr and US hedge fund Baker Street Capital wrapped up a takeover bid for Pyne Gould via Australasian Equity Partners No 1 LP, securing 76% of the company in a 37-cents-a-share takeover bid that closed in March.

Mr Kerr became involved in Pyne Gould in 2009, taking a cornerstone stake after the company faced large writedowns on the value of its Marac finance unit's property loan book, which has since been divested.

The shares fell 4.2% to a new low of 23 cents yesterday, valuing the company at $49.8 million.

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9 Comments & Questions

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Wow we all wait with baited breath for George Kerr's investment strategy for PGC.

One would hope that it is more tangible, profitable and realistic than what he has delivered to date.

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Investment strategy?

More like divestment strategy to stay afloat.

A downwards spiral and train wreck unfolding in slow motion for all to see.

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Is Kerr 'setting the stage' for a very dilutive rights issue?

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Citing a 7.5% LVR ratio AFTER liquidating assets, paying off all bank debt, and repaying half of the loan itself because the FMA forced them to seems a bit disingenuous to me.

The more relevant data point is the LVR at the time the loan was initially made by the heavily conflicted PGC Board. This is the decision that is under scrutiny.

I wonder if they have undertaken these other actions to try and confuse the unitholders of the Perpetual Fund, so they won't still ask for their money back when the moratorium is complete?

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There is not a word from the NZX on all this carry-ons involving 3 of the listed companies - PGC, Heartland and Wrightson.

So what's up, Mr Tim Bennett?

You continuing with the fine tradition of Mark Weldon's 'profit above all else?"

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Both PGC and Perpetual are Auckland based companies (the head offices are in Auckland as are the companies office registered addresses) nor are there any Christchurch based directors (the last one finished prior to February 2012) we washed our hands of them some time ago!

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A tangled web of what some may view as unhealthy, unethical, though legal, relationships between 3 companies listed on the NZX may be closer to coming to an end, and several shareholders may be starting to think....thank the good lord there is possibly light at the end of what has been a dark tunnel for some investors.

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And the NZX, as regulator and market, makes the market side the priority

No censure of PGC whatsoever!

Amazing!

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In early 2007 George Kerr appeared on PGC share registry... by that time he had a well developed plan to form a bank... In 2008 Kerr became a director of PGC - so I think you need to research a little more about Mr Kerr's interest in PGC. He was the driving force for the 09 rights issue...sub underwriter.

George had a plan!!

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