Bath Street rejects $22m demand from Pyne Gould
Bath Street Capital, which has been building up its local trustee business, has rejected a $22 million demand from Pyne Gould Corp over its acquisition of Perpetual Trust, saying no price was fixed in the deal.
The Auckland-based company said it has received a demand for $22 million plus interest and costs, which Pyne Gould claims it's owed from the sale of Perpetual Trust in 2014. Bath Street said the agreement was for Pyne Gould to be paid if the shares of a subsidiary company were listed on the stock market, something that hasn't happened.
"The amount of the payment was not fixed, and would be up to $22 million depending upon the price/earnings multiple at which NewCo was listed," the company said. "Whilst NewCo has continued to evaluate listing at some future date, there is no timetable for this event in the agreement with PGC."
The purchase attracted the attention of the Financial Markets Authority after Guernsey-based Pyne Gould recognised the $22 million gain in its 2014 annual earnings on the sale of Perpetual, despite the listing not occurring. Pyne Gould has since said it will reclassify the amount as an "available for sale financial asset" in the company's first-half accounts and would have the 'asset' revalued by an independent valuer.
Bath Street said it will "robustly defend the matter" and, if it goes to court, will require Pyne Gould principal George Kerr and other associates of the firm to give evidence.
The trustee firm has been expanding since its principal Andrew Barnes first agreed to buy Perpetual, adding Guardian Trust and more recently Covenant Trustee Services.