PGG Wrightson Finance's debtholders have voted in favour of the sale of the company's good loans to Haertland New Zealand in a deal that will see the wannabe bank take on resposibility for the rural lender's obligations to its secured depositors, unsecured depositors and bondholders.
PGG Wrightson Finance CEO Mark Darrow said the deal, expected to be valued at about NZ$102 million, was expected to be completed on August 31.
Heartland NZ, creataed in January through the merger of Marac Finance, CBS Canterbury and Southern Cross Building Society, plans to acquire between NZ$400 million and NZ$430 million worth of PGG Wrightson Finance's good loans in a deal that would leave NZ$90 million worth of "bad loans" with PGG Wrightson, see PGG Wrightson provide Heartland NZ with full recourse over a further eight loans with a book value of about NZ$30 million, and terminate and repurchase a NZ$54.5 million risk sharing agreement PGG Wrightson Finance has in place with ASB.
Both Heartland NZ and PGG Wrightson Finance have deposits coverd by the extended Crown retail deposit guarantee scheme. Standard & Poor's lowered the outlook on Heartland's BBB- investment grade credit rating to "negative" from "stable" on Friday.
Read PGG Wrightson's statement below:
PGG Wrightson Finance Investors approve Heartland transaction PGG Wrightson Finance (PWF) has confirmed that the transaction for the sale of the business to Heartland was approved by PWF investors at three investor group special meetings held today (15 August 2011).
This is part of the overall approval process which now just requires the completion of Heartland’s capital raising and approval by New Zealand Treasury for the Crown, to be finalised.
The expected date for completion for all approvals remains 31 August 2011.
The voting received mostly via proxy required a 75% vote to pass and received overwhelming 95.83% support by Bondholders, 99.03% support by Secured Depositors, and 88.52% support by Unsecured Depositors for the resolutions.
CEO for PWF Mark Darrow said the strong investor support is very pleasing and mirrors that received earlier from the PGG Wrightson shareholders.
“Based on the deal being confirmed in two weeks, the PGG Wrightson and Heartland relationship takes on two new dimensions; both with the signing of a Distribution agreement whereby Heartland will provide finance to PGG Wrightson clients and PGG Wrightson taking a $10m shareholding in Heartland.
“Heartland is passionate about the agriculture sector and we will see a continuation and expansion of the services currently offered by the rural finance provider under Heartland ownership, but with greater impetus, particularly in their ability to provide lending to more PGG Wrightson clients.”