Motor Trade Finance fights off approaches
New Zealand Stock Exchange-listed Motor Trade Finance says it has so far spurned an aquisition offer by a rival finance company.
It has warned shareholders not to make any undertakings with the rival, Heartland New Zealand.
Heartland had approached the MTF board about the prospect of making an acquisition offer, including a written offer in May, MTF managing director Angus Bradshaw said in a statement.
But after taking legal and commercial advice the MTF board had decided the outlined proposal was without merit.
The board was planning to update shareholders further but said in the meantime it was advising them "not to make any undertakings to Heartland or any other party in regard to their MTF shares".
MTF is a finance company that helps provide financing for new and used cars and other vehicles, including motorcycles, and has a loan book worth about $437 million.
It has a network of franchisees and also individual clients that tend to be motor and motorcycle dealers.
Heartland held a materially different view to that of MTF's board as to the potential impact on MTF from an ongoing court case, MTF said.
The court case is about the fees that MTF charged to a 39 clients, with the clients or purchasers of motor vehicles having come through a motorcycle dealership, Sportzone Motorcycles.
The court case, instigated by the Commerce Commission, led to the High Court finding breaches of the Credit Contract and Consumer Finance Act 2003 in respect of credit fees charged in contracts originated by Sportzone.
But the court case was subject to appeal in the Court of Appeal.
The MTF board had offered to engage further with Heartland to see if an appropriate proposal, that could be put to shareholders, could be agreed.
"We failed to agree a basis for moving forward with Heartland," Bradshaw said.
"As a consequence, formal discussions were terminated."
The MTF board was aware Heartland had been engaging with selected MTF shareholders, Bradshaw said.
In a separate notice to the stock exchange last week, MTF said it had received a letter from shareholders, who together hold 8.1 per cent of MTF ordinary shares.
The letter requestedMTF convene a special meeting for shareholders to consider consider certain resolutions in relation to the handling and communications with shareholders in respect of the Sportzone court case.
The resolutions effectively request the MTF board make public confidential information regarding the Commerce Commission case.
"MTF believes the proposed resolutions and the supporting statement contain some errors of fact and assumptions and has proposed to meet with the proposing shareholders, prior to issuing a notice of meeting, to address those errors and discuss their proposed approach more generally," Bradshaw said.
"MTF expects to issue a notice of meeting setting out the resolutions, and your board's response to them, as soon as practicable after that meeting," he said in the letter to shareholders issued through the NZX debt market.
MTF would provide more detail when the notice of meeting was issued.
MTF said if Heartland wished to make an offer for MTF shares it should do so under the Takeovers Code.
"The appropriate channel is through the MTF board ... and not through selected shareholders."
The MTF board was happy to work with Heartland on a proposal with merit, but to date no such proposal had been put forward.
Heartland, in a statement issued through the NZX, acknowledged the possibility of Heartland acquiring MTF.
"Heartland confirms that it could be interested in acquiring the business of MTF if the shareholders, franchisees and dealers of MTF were receptive to a proposal, and if the existing issues between MTF and the Commerce Commission as to loan fees were substantially resolved," the company said.
"Heartland does not have sufficient information to comment on the value it would place on that business, or the timing or structure of any acquisition if a proposal was welcomed," Heartland said.
Heartland shares were trading unchanged at 96 cents this morning.
MTF preference shares were untraded.