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NZ$1.6 million of shares issued to Pyne Gould Corporation executives, managers as reward for 'Heartland Bank' deal

NZ$1.6 million of shares issued to Pyne Gould Corporation executives, managers as reward for 'Heartland Bank' deal

Pyne Gould Corporation (PGC) is issuing shares to executives and senior managers to reward them for helping push through the merger of PGC subsidiary Marac Finance with CBS Canterbury and the Southern Cross Building Society.

PGC said it would issue about NZ$1.6 million worth, or up to 4.4 million new shares at 36.74 cents each, the volume weighted average price over the five days before the issues were granted. PGC shares were unchanged today at 36c each.

“The share plan rewards senior management for their vision in creating a financial services group capable of meeting the financial needs of small to medium enterprises and individuals nationwide," PGC chairman Bruce Irvine said.

"It also provides an incentive for them to be part of its future development and growth. The plan closely aligns the interests of senior management with those of PGC and its shareholders.”

The merger was completed on January 7. The merged entity, currently known as Building Society Holdings Limited, is due to list on the sharemarket on January 31. It has obtained a BBB- investment grade credit rating from Standard & Poor's and has been accepted into the extended Crown retail deposit guarantee scheme, which runs until December 31 this year, by the Treasury.

Building Society Holdings is expected to apply for a banking licence from the Reserve Bank in July. PGC's plan calls for Building Society Holdings, or the proposed 'Heartland Bank', to double its NZ$2.2 billion asset base within five years through growing lending to families, small businesses and the rural sector.

Former CBS boss Bryan Inch unexpectedly quit as head of retail at the merged entity last week telling that he had decided he didn't fancy setting up a national banking branch network for a second time.

Irvine said the key features of the share plan are;

- The immediate issuance of half the shares to eligible employees.
- The placement into escrow of the balance of the shares until October 1 when, provided the employee is still working for Building Society Holdings, those shares will be released to the employee in three tranches over three months.

Irvine said the share scheme would have a NZ$1.7 million impact on net profit after tax in the 2011 financial year, with PGC taking a NZ $1.4 million hit and Building Society Holdings impacted to the tune of NZ$300,000 this year and NZ$100,000 next year.

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Good old fashioned carpetbagging