MTF shareholders concerned by court case
A group of dissatisfied Motor Trade Finances shareholders have called a special meeting, worried they could be hit by a court case surrounding the company and fees it charges clients.
MTF's board has responded by asking its 500 shareholder base to vote against the group's resolutions at the special meeting.
The board says the resolutions "appear designed to undermine the management and governance of MTF".
The group of nine shareholders, who hold 8.1 per cent of MTF's shares, have concerns about the potential impact on the company from a court case over fees that MTF had charged 39 people who bought vehicles at the Sportzone Motorcycles dealership. Sportzone is in liquidation.
The court case has been brought by the Commerce Commission.
One of the dissatisfied shareholders, Doug Rushbrooke, runs a MTF franchise in the Waikato. He said he and other shareholders had not been kept fully informed about the potential impact of the court case.
Rushbrooke said the group of nine shareholders was not attempting to undermine the company, rather they wanted "reasonable disclosure about the potential impact of the fees court case back on them.
"We don't believe we've been told adequately . . . the potential [harm]," Rushbrooke said.
The group of nine were either MTF franchisees or motor dealers regularly using MTF financing.
The case, instigated by the Commerce Commission, led to the High Court finding breaches of the Credit Contract and Consumer Finance Act 2003 in respect to these fees.
The court case is continuing, and chairman Stephen Higgs says the MTF board views the fees as reasonable and is awaiting further outcomes from a hearing, particularly the judge's view of fee levels.
In September last year an initial judgement showed a number of credit fees charged by MTF including loan establishment fees plus various account maintenance fees. MTF's website now says establishment fees should not add up to more than $440.
The special meeting called by Rushbrooke and others will be held on August 13 at the Forsyth Barr Stadium in Dunedin.
MTF provides financing for new and used vehicles, both through a group of franchisees and through offering financing to motor dealerships. It manages a loan book worth about $437 million.
The resolutions proposed by the nine include that MTF's board calculate the maximum quantum of fees charged over the past three years, which could be regarded as "unreasonable" if the High Court decision is upheld on appeal, and then advise shareholders.
Higgs said that while the board did not agree with the resolutions, it was obliged to hold the special meeting.
"We'd be confident the resolutions won't be supported."
It was clear to the board that any attempt to reach a settlement with the Commerce Commission at this point was impractical, he said.
There was still to be a ruling by the High Court judge as to how much higher the fees might be than reasonable.
Separately MTF had lodged an appeal against the findings of the original High Court judgement. This was expected to be heard in November.
NZX-listed bank Heartland says it remains interested in a friendly takeover of MTF but at this point MTF has not disclosed enough information about the fees-based court case and potential financial impact.
Heartland, which operates the Marac financing brand, has been talking to some shareholders in MTF, according to the MTF board. And MTF has recently warned shareholders not to make any undertakings with Heartland, a "direct competitor".
Heartland head of strategic and product development Michael Jonas said the bank would look at MTF as a potential acquisition but only in the right circumstances including a reasonable resolution of the court case.
"We'd want to know that we're being invited in by the owners and their franchisees and dealers . . . we're not interested in pursuing a hostile type takeover, that's not our style. It's my ongoing hope that we might be [invited]," Jonas said.
MTF shareholder Doug Rushbrooke said he had not been contacted by Heartland. He was not aware of any of the other eight shareholders in the group of nine having been contacted by the small bank.