Motor Trade Finance rejects takeover offers as too low

Motor Trade Finance [NZDX: MTFHC] has rejected all offers from parties looking to acquire all or part of the Dunedin-based auto-financier, saying they undervalued the business.

The company said none of the indicative proposals it had received in a market-testing process were good enough to put forward to shareholders.

MTF got one indicative proposal for the whole business and multiple proposals to acquire a cornerstone shareholding of up to 20%, it said.

The proposal for 100% of the shares included a per-share price which was "considerably less than the adjusted net asset backing of MTF," the board said. The full offer also didn't give the board confidence that the originators would get the same level of commission payments in the future under the new ownership.

The board said the proposals to buy a cornerstone shareholding proposals weren't in the best interests of MTF.

In the six months ended March 31, the company said its adjusted net asset backing was $1.89 per ordinary share. It paid total dividends of 13.65c a share in 2015, and 4c a share so far this year.

Heartland Bank said last October that it might pay $1.50 per share for between 10-20% of MTF, and was interested in a full takeover if it could make an agreement with the board.

Financial services firm Turners offered $1.15 per share for up to 20% of the company, though that offer expired in October 2015. At the time, MTF told shareholders to wait for an updated valuation before accepting the Turners offer, saying an internal valuation last year valued the company's shares for non-originating shareholders at $1.16 apiece, and was "substantially higher for active shareholders" who also receive extra commission due to their relationship with the lender.

MTF paid $25.9 million to shareholder originators in the first half of 2016, including commissions, fees and payment waivers. The shares last traded at $1.35 on ShareMart.

The market-testing process was a response to several unsolicited offers and had been a "significant distraction" for the board which meant it needed to hire a financial adviser to help, it said.

"The board looks forward to focusing on developing and growing the MTF business and expanding our franchise and dealer originator networks," it said.