The Toi Foundation, TSB's parent, will reopen consultation on the proposed TSB and Heartland merger after the charitable trust says it incorrectly calculated the timeframe of the initial public consultation by one day.
Heartland Group Holdings announced in June that it had signed a deal with the Toi Foundation to buy all TSB shares on issue from Toi in a deal valued at $620 million.
The proposed deal is subject to satisfaction of several conditions, including community consultation by Toi Foundation with Taranaki residents. The timeframe for this consultation was originally open from 9am on Wednesday, June 3 until 5pm on Tuesday, June 30.
However, the Toi Foundation shared on Friday it had been alerted that the 28-day consultation period had mistakenly begun on the day of the official public notice of the proposed deal rather than the day following.
Toi Foundation chair Chris Ussher said that after being alerted to this, the trustees made the decision to reopen the consultation in order to ensure the process remained fair, transparent and “fully compliant”.
“The error relates to how the commencement and close time for the 28-day period was calculated. On review, it closed a day earlier than it should have done and we apologise unreservedly. Even though we had been accepting late submissions, we recognise the loss of time in the process may have meant people who wanted to submit were not able to,” Ussher said in a statement.
“We appreciate the community’s engagement in the process to date. We have received a wide range of submissions and continue to welcome the community’s feedback on the proposal. If you have already made a submission, it will remain included. You are not required to resubmit”.
The new consultation period will open on July 10. The Toi Foundation told interest.co.nz in early July that a total of 1203 submissions had been received from the initial public consultation.
Ussher noted that the second consultation programme had the same objective as the first process, which was to “listen to the feedback from those who reside within the legislated boundary”.
“Trustees have undertaken a significant programme of work to assess the proposal and the community impact,” he said.
Still targeting December
Heartland Group Holdings told the NZX on Friday morning that it now expects Toi Foundation trustees to provide a decision on the proposed transaction in August, following the conclusion of the second community consultation period.
“The proposed merger continues to target completion in December 2026, subject to satisfaction of the remaining conditions in the merger implementation agreement, including Toi Foundation trustee approval, Heartland shareholder approval and any necessary New Zealand and Australian regulatory approvals,” the bank said.
However, Heartland’s planned Special Shareholder Meeting to vote on the proposed transaction on August 31 will have to be rescheduled while the transaction remains subject to Toi Foundation trustee approval.
“Heartland will provide a further update to the market once a revised Special Shareholder Meeting date can be confirmed, including to advise an updated director nomination period,” the bank said.
Through the proposed merger, Heartland wants to establish “a New Zealand challenger bank of scale with a regional focus” which will be called TSB Heartland Bank.
If the deal goes ahead, one Toi Foundation nominee would be appointed to the Heartland Group board, and two existing TSB directors would join the TSB Heartland Bank board.
The $620 million price tag for TSB includes a $50 million pre-completion cash dividend from TSB. The deal also includes $250 million of ordinary equity issued to Toi Foundation by Heartland, being 200 million shares issued for $1.25 per share, which represents a 17.5% ownership interest in Heartland post-completion of the proposed deal.
On top of that, the arrangement also includes $56 million of subordinated debt issued to Toi Foundation by Heartland Bank as Reserve Bank-eligible Tier 2 regulatory capital and a $264 million vendor loan provided to Heartland by Toi Foundation.
Ussher has estimated that Toi's annual dividends from TSB Heartland Bank would be around $30 million, compared to the average of about $10 million from TSB over recent years.
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