The Heartland Story So Far
Quote:
Originally Posted by
winner69
Maybe this the overhang noodles talking about
I think noodles clarified his specific overhang of concern. But you are right Winner. If you look back far enough, there are more overhangs to consider.
Pyne Gould Corporation (PGC) used to control their rural arm Pyne Gould Guinness. Pyne Gould Guinness merged with Wrightsons to form PGG Wrightson, and the controlling 50% stake dropped to about 25%. Then Alan Lai and Agria came on board in two stages, leaving what was a strategic controlling stake in PGG to become an overhang of 12.5% in the new combined PGW. Except it wasn't an overhang because PGC were going to morph into a rural investment entity with the PGW stake just being the opening gambit. Until plans changed and George Kerr decided that investing in motorway service stops in the UK offered steadier future cashflows. The NZ currency appreciation and cessation of dividends from the UK then put paid to Kerr's UK expansion.
While this was happening the GFC came along and put the skids under PGC's Marac and other financial deals involving property. So the banks demanded PGC recapitalise, and the 'good bit' became Heartland. But then Heartland decided their difficult loans would be better handled in house after all, so bought those back off PGC. Somewhere in all that recapitalisation PGC had to sell both of their remaining stakes in HNZ and PGW at rock bottom prices. Meanwhile during the formation of Heartland, PGW wanted out of their "in house" finance division, but in a completely unrelated transaction (insert Tui billboard here) decided to pick up a small 3% share of HNZ who bought it, just to make sure they really did have enough money to operate properly. It was this 'significant' PGW stake in HNZ that was most recently sold off.
None of the entities mentioned so far have been flush of cash since the GFC. From my perspective there was a lot of passing the cash parcel around to get PGW, PGC, HNZ and Agria through their worst times. When companies go through these kind of restructurings, I don't know how those who come in late do for clarity. In some ways these situations might have been better resolved if a new company division had been set up specifically to rip small shareholders off. That would at least have put everything out in the open.
SNOOPY