Turners builds MTF stake to 7.6%, still in talks with some shareholders
Turners [NZX: TNR], the company formerly known as Dorchester Pacific, has built up a 7.6% stake in Motor Trade Finances [NZDX: MTFHC] and is in talks with other shareholders after its offer to buy up to a fifth of the auto-lender closed earlier this month without yielding a blocking stake against a rival bid.
The Auckland-based company said it received acceptances approved by the MTF board lifting its shareholding to 7.6% from the 1% it held before the offer. Turners is negotiating with shareholders who no longer write loans for the auto-lender but are still required to hold shares as that debt ran off.
"We are prepared to consider taking over existing obligations or acquiring receivables from MTF members in 'run-off' to enable them to sell their holdings," chief executive Paul Byrne said. "However, our main focus now will be to work with MTF management, board and shareholders to explore any opportunities and value we might be able to bring to the business."
Turners' offer of $1.15 a share to buy up to 20% of MTF closed on October 17, and would have required the Dunedin-based auto-lender to change its constitution, which restricted holdings of more than 10%.
MTF's board didn't form a view on the merits of Turners owning 10% of the company, but said the firm's offer was below its internal valuation range of $1.39-to-$1.71 a share. It also said the offer represented a premium to the price the shares had traded at over the past year and presented an exit opportunity for shareholders who no longer originated loans with MTF.
Turners said it would pay shareholders in the next day or so, with the investment funded from working capital.
The company's shares were unchanged at 26.5c, and have dropped 17% this year.
The Turners bid reinvigorated registered bank Heartland New Zealand's [NZX: HNZ] interest in MTF, which said it would pay $1.50 for between 10% and 20% and was still keen on mounting a full takeover bid.
MTF's board was lukewarm on the Heartland offer, saying Turners could potentially build a blocking 10% stake, and viewed the bank as a competitor who it was unlikely to recommend a deal allowing it to own more than 10% other than as part of a full takeover offer.
Among Heartland's stipulations for a full takeover bid is that MTF doesn't have any actual, claimed, or potential liability for excess fees charged in 39 loan contracts originated by Sportzone between May 2005 and July 2008, in a case brought against the lender by the Commerce Commission. Sportzone had an agreement with MTF allowing the defunct motorcycle business to write credit contracts for buyers of motorcycles, and the case is set to be heard in the Supreme Court next month.
Heartland shares last traded at $1.23 and have gained 8.9% this year.