Motor Trade Finances chairman Stephen Higgs is urging
shareholders to vote against resolutions he says appear
designed to undermine the management and governance of the
In a letter released yesterday, Mr Higgs said a special
meeting would be held in Dunedin on August 13.
The meeting had been called by nine MTF proposing
shareholders who together held 8.1% of the company.
The purpose of the meeting was to consider resolutions put
forward by those shareholders relating to MTF's handling of
the Sportzone court case and its communication and disclosure
to shareholders in relation to the litigation.
''The resolutions indicate dissatisfaction with the way MTF
has handled the litigation,'' he said.
The proposing shareholders wanted MTF to estimate the
potential liability of MTF in the event a further case, of
which there was no present indication, in respect of all
other loans in the MTF portfolio was successful.
And those shareholders had also suggested MTF approach the
Commerce Commission to settle the Sportzone litigation and
any potential liability for loans not subject of the
Mr Higgs said the proposing shareholders were not happy with
disclosure by MTF and asserted that rather than engage in the
quantification process with the commission, MTF chose to
appeal the litigation.
''The resolutions appear designed to undermine the management
and governance of MTF and contain a number of errors that
would seem to play into the hands of those who we compete
against,'' he said.
Earlier, it was revealed Heartland Bank wanted to acquire MTF
to access its substantial motor vehicle lending book.
It was understood the proposing shareholders had been
approached by Heartland.
Mr Higgs said the board was unclear as to the motivation
behind the proposals.
''The proposing shareholders could have taken a more
constructive approach and asked management or the board for
the information requested in the resolutions - or sought to
discuss the litigation or how it was being managed.
''That request would have been acted on and would likely have
resulted in a communication to shareholders more generally in
a much more efficient way than needing to call a special
The resolutions appeared to be an attempt to disrupt the
management of the Sportzone litigation, at a critical point
in the proceedings, before the litigation had run its full
More generally, it was an unnecessary distraction, he said.
To seek a settlement with the commission would require MTF to
admit liability in a case which had not yet been decided.
It would remove MTF's ability to have the High Court case
overturned on appeal and would potentially require MTF to
unnecessarily admit liability in regard to up to a further
three years of loans, Mr Higgs said.
The Sportzone court case was brought by the Commerce
Commission in December 2009 for alleged breaches of the
Credit Contract and Consumer Finance Act 2003, in respect of
credit fees charged in 39 credit contracts originated by
Sportzone Motorcycles (in liquidation) between 2005 and 2008.
The litigation applies to 39 loans, it does not apply to any