Businessman George Kerr and major shareholder Baker Street Capital LP are trying to take Pyne Gould Corp. private via a full cash takeover offer at a price near a record-low share price, arguing the company "has little in common with the PGC shareholders have long been associated with".
The great-great-grandson of F H Pyne, who started one of PGC’s founding businesses, Pyne & Co. in 1887, has 80% of the capital of bid vehicle Australasian Equity Partners Fund No. 1 LP via Pyne Holdings and U.S. hedge fund Baker Street Capital has 20%.
AEP is offering 33 cents a share, which is a small premium to the 26-cent record-low reached last month and 27 cents in morning trading. The shares have since climbed to 32 cents.
Pyne Holdings owns 13.2% of PGC and Baker Street Capital owns 19.78%. The bidder says these holdings together with commitments from major shareholders, including Accident Compensation Corp., with 4.53% give it a total 37.51% via lockup agreements.
"Baker Street and I have therefore decided that, with the remaining PGC businesses focusing on growth rather than dividends, it is appropriate to give all shareholders the opportunity to sell their shares for cash now," Kerr said.
"With world sharemarkets again experiencing significant volatility, a number of PGC's largest shareholders have substantially reduced their shareholdings in recent weeks," he said.
PGC has announced large losses in two of the past three years and in May distributed shares it held in Heartland Building Society Holdings Ltd. directly to shareholders. It has a residual 9.5% holding in PGG Wrightson Ltd. and a 6% holding in Heartland and it owns Perpetual Group, which encompasses Perpetual Asset Management.
It also has a management contract for Equity Partners Infrastructure Company No.1 Ltd and also holds impaired assets from Marac. PGC's assets needed patient investors with a long term horizon and they may need to contribute more capital, Kerr said.
If the takeover is successful, AEP will receive an annual management fee of NZ$600,000 plus GST.