Pyne Gould completes $237M rights offer

Pyne Gould completes $237M rights offer, helped by underwriters

By Jonathan Underhill

Oct. 21 (BusinessWire) - Pyne Gould Corp. completed its offer of rights, raising NZ$237 million to strengthen its balance sheet with the help of underwriters led by First NZ Capital Securities.

Shareholders subscribed for 524.9 million new shares, amounting to NZ$210 million and representing a take-up of about 88.7%. Some 66.6 million shares, a shortfall of $27 million, or 11.3%, will be taken up by underwriters, the company said in a statement. Investors could buy six new shares for each one held at 40 cents apiece. The shares last traded at 46 cents.

“We emerge from this process with a strong capital structure and a broader base of shareholders,” said chairman Sam Maling, adding that he was pleased with the uptake. “The offer represented over 200% of our market capitalisation – a large raising by any measure.”

Pyne Gould is re-organising its balance sheet, taking impaired loans from its would-be banking unit, Marac, and housing them in what ultimately will be a new credit fund under its asset management arm. Marac’s credit rating was cut to BB+, below investment grade, by Standard & Poor’s because of its reduced financial flexibility.

The rights offer “positively surprised,” said Paul Robertshawe, who oversees $250 million at Tower Asset Management. “It means people who were buying the rights have decided to take those rights up and back the company.”

More than 35% of the rights changed hands, which Maling described as “a high but not unexpected level.”

Marac is hoping to restore its investment grade credit rating and gain a banking licence. Under its reorganization, $175 million of impaired loans will be taken off Marac’s books, with the parent taking an $85 million charge. They then go onto the books of Pyne Gould’s Perpetual unit valued at $90 million.

(BusinessWire)

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