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Kerr's AEP gains control of Pyne Gould Corp

UPDATED January 19: George Kerr's Australasian Equity Partners has passed the milestone 50% mark in acceptances of its full takeover of Pyne Gould Corporation.

NBR staff
Thu, 24 Nov 2011

UPDATED January 19: George Kerr’s Australasian Equity Partners (AEP) has passed the milestone 50% mark in acceptances of its full takeover of Pyne Gould Corporation.

In a statement released late yesterday, AEP says it has now acquired 50.41% of shares in PGC which gives it the option, if it falls short of 90% by 31 January, to complete the takeover offer by waiving the 90% minimum acceptance condition it originally set.

If that scenario plays out, AEP says it would seek “appropriate representation” on the PGC board and would “then take steps to ensure that PGC embarks on a strategy of investing for growth”. 

AEP reiterated that if it becomes the majority shareholder in PGC, it expects that company will “for the foreseeable future” reinvest earnings rather than pay dividends.

PGC is also likely to require substantial additional capital in order to fund its long-term growth strategy, AEP said.

The closing date for the full takeover offer remains January 31, unless extended. 

UPDATED January 12: The latest takeover statement from Pyne Gould Corporation shows the George Kerr-led Australasian Equity Partners is near the 50% holding it needs for control.

Acceptances from PGC shareholders over the New Year break show the private equity fund now holds 49.46%, up from the 48.4% reported on January 4.

UPDATED January 4: George Kerr's Australasian Equity Partners Fund stake in Pyne Gould Corporation is edging higher.

In a notice to NZX, AEP said more acceptances from PGC shareholders over the Christmas period had lifted the fund's stake to 48.4% from the 47.1% it last reported as holding on December 22.

By Duncan Bridgeman

George Kerr's Australasian Equity Partners Fund has extended its offer to buy investment firm Pyne Gould Corporation by seven days.

AEP is limited partnership between Mr Kerr, a PGC director and shareholder, and Californian hedge fund Baker Street Capital.

Between them they held 33.9% of PGC and said today they had undertakings for 38.6% of the company.

AEP last week raised its offer by 4c to 37c-a-share.

The takeover bid is still well short of the valuation put on the company by independent advisor Grant Samuel of between 49c and 57c-a-share, but has been pitched to shareholders as cash in the hand now, instead of a long road to share price recovery without dividend payments.

The takeover offer has been extended until December 16, from the original December 9 date.

Grant Samuel said in its report that the original 33c-a-share bid presented no compelling reason for shareholders to sell into the offer.

The improved offer is still 24-35% discount to Grant Samuel’s valuation range.

Baker Street accumulated its 19.78% stake since June at prices ranging from 35c-a-share to 40c-a-share for a total consideration of $8.13 million.

Mr Kerr reportedly spent roughly $50 million lifting his PGC stake from 10% to 14.8% in the company’s mammoth $272 million capital raising in 2009.

Since then PGC has undergone a major restructuring process and sold its major asset, finance firm Marac, into the Heartland banking merger and distributed the proceeds to shareholders.

What remains is a disparate collection of assets and investments, including minor stakes in PGG Wrightson and Heartland as well as a collection of impaired property loans and assets stripped out of Marac.

It runs Perpetual Group, which operates a wealth management unit with funds under management of about $600 million, is manager of Epic, an infrastructure fund in wind down mode and owns other assets through Torchlight Investment Group.

NBR staff
Thu, 24 Nov 2011
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Kerr's AEP gains control of Pyne Gould Corp