Discussions on the future of Dunedin-based Motor Trade Finances are likely to be prolonged. Photo by Gerard O'Brien.
The future of Dunedin-based Motor Trade Finances is up for
grabs with listed bank Heartland New Zealand making a play
for the company formed in the city more than 40 years ago.
MTF chairman Stephen Higgs issued a letter yesterday to all
shareholders outlining attempts by Heartland, or the bank's
finance arm Marac, to engage with selected MTF shareholders.
''The board believes this engagement is related to a recent
proposal by Heartland to acquire MTF that was rejected by
Mr Higgs told the Otago Daily Times the group of
selected shareholders was small and spread across New
Zealand, but predominantly in the North Island.
Mr Higgs, along with senior MTF management and board members,
would meet the group of shareholders tomorrow to discuss with
them their concerns.
Following the meeting, MTF would proceed with a special
meeting, called for by the shareholders.
''We are confident we have support across a wide section of
"We have a business model that is working well, growing
market share and we recently issued a medium-term note issue
which was oversubscribed,'' Mr Higgs said.
Craigs Investment Partners broker Peter McIntyre said the
issue was headed for a ''good old boardroom stoush'' with
Heartland on the acquisition trail.
Recently, Heartland had spent $87 million in cash and shares
for Sentinel - the Seniors Money International home equity
MTF has $40 million of perpetual preference shares listed on
NZX's debt market, which last traded at 68c in the dollar.
''This is a hostile takeover, no doubt. Heartland is seeking
ways to get better value for shareholders and they can see
MTF as a good opportunity.
''I suspect this is not going away any time soon and will be
a long, drawn-out process,'' he said.
Mr Higgs was not ruling out a sale of MTF to Heartland but it
had to come with benefits to shareholders - car dealers who
own the co-operative.
Heartland earlier approached the board but the initial
proposal was without merit regarding the indicative price and
in other respects.
The proposal was incomplete, highly conditional and incapable
It emerged Heartland held a different view than MTF about the
potential impact on MTF from the High Court case brought by
the Commerce Commission in which the court found breaches of
the Credit Contract and Consumer Finance Act.
The finding was subject to appeal at the Court of Appeal.
Mr Higgs said the board offered to talk further with
Heartland to see if an appropriate proposal could be agreed
upon to put before shareholders.
''This would have involved sharing MTF's confidential
information regarding the commission case, and other
information, with Heartland under appropriate
"Heartland was not prepared to accept confidentiality
arrangements and undertakings which, given Heartland is a
director competitor, we regarded as appropriate.
"Heartland has failed to indicate a willingness to reconsider
its indicative price.''
As a result, formal discussions were ended, he said.
The board now wanted to see communications by Heartland to
MTF shareholders result in shareholders having complete and
Heartland had no obligation to act in the best interests of
MTF shareholders, Mr Higgs said.
Any views Heartland expressed about MTF's business or
financial position must be considered by shareholders in
light of Heartland being a competitor and potential acquirer
''If Heartland wishes to make an offer for the shares in MTF,
it should do so under the Takeovers Code.
"Until Heartland is prepared to amend its proposal, we can
only continue to regard it as being without merit,'' he said.
Heartland managing director Jeff Greenslade played down the
He only confirmed Heartland could be interested in buying MTF
if the shareholders, franchisees and dealers of MTF were
receptive to a proposal.
Also, any deal was contingent on existing issues between MTF
and the Commerce Commission on loan fees being resolved.
''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,''
• Do not make any undertakings to any party regarding the
special meeting until after the notice of meeting and details
have been issued.
• Do not make any undertakings to Heartland New Zealand, or
any other party, in regard to your MTF shares before the
board of MTF has received and reviewed any formal proposal,
taken proper advice and is able to make an appropriate
recommendation to shareholders.
• Treat any communications from Heartland New Zealand with
caution, given it is a competitor and potential acquirer of
MTF. Heartland has an interest in raising unsubstantiated
questions that may negatively affect the value perception of