Vote against resolutions, MTF chairman urges

Stephen Higgs.
Stephen Higgs.
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 board.

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 litigation.

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 meeting.''

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 legal course.

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 issue

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 other loan.


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