The proposed merger of Pyne Gould's Marac Finance with Canterbury Building Society and Southern Cross Building Society is a step closer with the boards of all companies formally committing to the deal.
The merger, which would create a lender with $2.3 bi
The proposed merger of Pyne Gould's Marac Finance with Canterbury Building Society and Southern Cross Building Society is a step closer with the boards of all companies formally committing to the deal.
The merger, which would create a lender with $2.3 billion of assets, still requires approval from shareholders, bondholders and depositors to get over the line.
The respective boards have signed a binding merger implementation agreement today, and are aiming for the merger to take effect from January 1, they said in a joint statement to the NZX.
The merger would accomplish Marac's goal of becoming a registered bank and the group is seeking an NZX listing targeted for early February.
“After extensive due diligence, evaluation and independent analysis, we are firmly of the view that the merger is compelling and will be beneficial to all parties,” said Bruce Irvine, cchairman of the establishment board.
“As such, all four boards will be unanimous in recommending the merger proposal to their respective stakeholders.”
The group plans to make an application to the High Court for a scheme of arrangement shortly, followed by shareholder and investor meetings in November.
If approved the merger share proportions would be PGC 71%, CBS 14.5% and SCBS 14.5%.
PGC would remain a discrete entity, with a single holding in the merged entity while the individual shareholders of CBS and SCBS would own shares in their own right.
The board of the merged group would comprise up to nine directors; five (one of whom will be chairman) nominated by PGC; up to two nominated by SCBS; and up to two nominated by CBS. A minimum of three directors are required to be independent directors.
The parties involved said the merged entity would be well capitalised with CBS, SCBS and Marac having built up about $300 million of cash and liquid assets to ensure significant liquidity was available to the merged entity.
In addition, the merged entity was negotiating with banks to obtain undrawn standby banking facilities and securitisation facilities.
A NZDX retail bond issue would also be considered.
The four entities are advised by First NZ Capital, PricewaterhouseCoopers, Deloitte and Chapman Tripp.
Respective chairmen of the companies, CBS’s Gary leech, SCBS’s Geoff Ricketts and PGC’s Mr Irvine said the merger offered a compelling value enhancing proposition for members and shareholders “that would not otherwise be available to us on a standalone basis.”
“The landscape for finance companies and savings institutions is changing in the wake of the global financial crisis and as new regulations are implemented,” they said in a joint statement.
“The merged entity will not only comply with all applicable regulations but will be well placed to take advantage of expansion opportunities. We strongly believe that this is the best way forward for our respective businesses. Each of us intends doing all we can to obtain the required consents to make this happen and to implement the merger.”
