Pyne Gould posts $47.7m loss, targets litigation funding against failed finance companies
BUSINESSDESK: Pyne Gould Corp, the financial services firm looking to sell its Perpetual Trust unit, made a smaller annual loss in the 2012 financial year with writedowns dragging on the bottom line, and said its aims to start a litigation funding vehicle to cash in on actions against failed financiers.
The Christchurch-based company made a loss of $47.7 million, or 22 cents per share, in the 12 months ended June 30, compared to a loss of $141.1 million, or 13 cents, a year earlier, it says.
The firm took a $20.7 million charge for expected claims on its Real Estate Credit unit's management agreement for Marac assets with Heartland New Zealand and took a $25.4 million mark to market hit on securities, including an $11.1 million writedown in its now-divested PGG Wrightson stake.
The Torchlight unit, which specialises in squeezing value from distressed assets, made an operating profit of $1.6 million, while Pyne Gould's Perpetual Group made a loss of $5.1 million, which included increased legal and restructuring costs.
The firm plans to extend its strategy for the old Marac Finance unit, which saw the good loans carved out and merged to form Heartland New Zealand, and the bad loans put into the Torchlight unit's distressed asset book.
The third leg will see a new litigation fund set up to work with experienced litigation funders in Australia and New Zealand to pursue opportunities in class actions against the slew of failed lenders that destroyed billions of dollars of investor wealth.
"This is first a business opportunity. However, we believe it is important that investors, small and large, who lost by depositing with finance companies, access justice," managing director George Kerr says. "We place great reliance on expert litigation funders to win back depositors' money from failed finance companies via carefully researched and resourced, sustained litigation."
Pyne Gould is looking to divest the Perpetual unit and is still considering whether to shift its domicile overseas.
"We can say that as the majority of future PGC investment will now only be investing offshore or via the funds it manages, we intend to return to shareholders the proceeds of the sale of Perpetual in the form of a capital return," Mr Kerr says.
The Perpetual divestment is seen as the final leg of Pyne Gould's restructuring under the ownership of Kerr and Baker Street's Australasian Equity Partners No 1 LP.
The shares were unchanged at 29 cents, a 22% discount to Kerr and Baker Street's offer which closed in March.