PGC, Torchlight weigh up which assets to bid for

Pyne Gould Corporation (PGC) and Torchlight Fund, linked to its cornerstone shareholder, are interested in buying assets within failed lender South Canterbury Finance (SCF).

"I guess there are certainly assets in there which are attractive," Torchlight Fund chair and PGC cornerstone shareholder George Kerr said yesterday.

SCF was about 2 per cent of New Zealand's economy, "so if we can't find something we are probably not working hard enough".

"We are just working away and and working out which ones we want to do," Kerr said.

Torchlight invests in distressed assets, unlike PGC subsidiary Marac Finance, which is keeping well clear.

Kerr said others were understood to be wanting to buy all of SCF's assets, referring to a media report speculating that a bid for the shares in SCF had come from Permanent Investments, a company linked to wealthy Sydney-based businessman Duncan Saville.

SCF chief executive Sandy Maier said yesterday that the story on a bid for SCF shares was wrong.

Pyne Gould Corporation is also interested in parts of SCF but not the whole.

PGC chairman Bruce Irvine said last night it was uncertain PGC would get an opportunity to bid for parts because the Government wanted to sell "the whole thing".

Substantial parts of SCF's loans did not fit with the "heartland" strategy of being a lender to small and medium-sized businesses which PGC and subsidiary Marac Finance were pursuing with building societies CBS Canterbury and Southern Cross Building Society.

Three parties left in the bidding for SCF last week were an overseas private equity fund, a South-East Asian fund and a group of local and international investors and a couple of those may bid again.

Aspiring Asset Management, a PGC shareholder, said in its June newsletter: "We suspect that Torchlight has invested in SCF actually hoping for receivership. By placing itself at the table Torchlight increases the possibility of playing a significant part in any sorting out of SCF should it be wound up."

PGC had a 15 per cent stake in Torchlight, Aspiring Asset Management says.

John Duncan, chief executive of PGC subsidiary Perpetual Group, said Torchlight had the backing of a range of domestic and international investors and investment companies, including leading specialists in credit and real estate private equity. It had capital of $150m following a successful capital raising in July.

Maier said with regard to the reported possible bid for SCF shares: "Categorically without question of a doubt and to the best of my knowledge no-one has ever made a bid for the shares of South Canterbury."

The report said a businessman was going to put up more than $1.6 billion to buy the shares. The story said a source had seen Maier on a flight to Auckland and he was able to see Maier flicking through documents which was a sale and purchase agreement for SCF from Permanent Investments.

"Anybody who paid more than 50c for those shares in South Canterbury would be an idiot," Maier said.

The shares belonged mostly to Hubbard so it was not something that the Government would deal with, Maier said.

"The shares are under water. They are worth nothing. The Government has told you they are worth minus $600m. So why would anybody buy these?"

- © Fairfax NZ News