NZF directors' surprise at $5m valuation discrepancy

Troubled financial services firm NZF Group says it might revisit MPMH's valuation after an almost $5 million discrepancy.

On Friday, the listed company said its half-stake in MPMH is worth $2.76 million, according to an independent valuation by Simmons Corporate Finance.

MPMH, NZF's joint venture with Australian company Liberty Financial, is the parent company of Mike Pero Mortgages and 50% owner of Mike Pero Real Estate.

In a statement to the NZX today, NZF says MPMH has a carrying value of $7.5 million on its balance sheet, supported by annual impairment testing and an external valuation in October last year.

"The directors of NZF Group are surprised at the discrepancy between the outcome of the valuation and the carrying value, which they believed to be reasonable.

"They acknowledge that they may need to reconsider the carrying value of this investment."

The statement lists possible reasons for the difference as: the previous valuation being done on a discounted cashflows basis; the current valuation places little weight on the property market's recovery; the valuer being denied access to MPMH board information, such as projections.

The sale now depends on shareholder approval.

NZF Group chief executive Mark Thornton says the future of the company and its financial position depends on three "uncertainties" – its court battle with the receivers of its failed subisiary NZF Money, resolving the MPMH battle with Liberty, including court proceedings, and obtaining approval for capital note holders to convert their notes to shares.

NZF Money went into receivership in July 2011 owing $16.4 million. The receivers, KordaMentha, estimate the top return to debenture holders to be 27%.

NZF Group shares (NZX: NZF) last traded at 0.3 cents, valuing the firm at $330,000.

dwilliams@nbr.co.nz


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