HNZ calls for full disclosure

Heartland New Zealand Ltd (HNZ) have gone cold on possibly acquiring Motor Trade Finance (MTF) due a perceived lack of disclosure about customers potentially having to be refunded fees. MTF, which has a loan book of about $438 million, informed its shareholders on Monday it rejected an HNZ takeover proposal earlier this year. It received advice not to inform shareholders, reports NBR, but was forced to after HNZ engaged with a small number of MTF shareholders. Chairman Stephen Higgs told NBR the finance company would meetwith this group, which holds about eight per cent of voting rights, and stage a special meeting with the remainder of shareholders. Michael Jonas, HNZ’s head of strategic and product development, says: “The request from shareholders is for further information regarding potential liability the company is facing, and how that may play out for franchisees and dealers.” Last year, the High Court decided MTF and Sportzone Motorcycles charged unreasonable establishment, maintenance and late fees in 39 loan contracts. The Court of Appeal will hear the case in November. HNZ talked to some shareholders – customers of the bank – to better understand the liability MTF, its shareholders and franchisees may face as a result of the court case, says Jonas. HNZ may be willing to re-enter acquisition talks if MTF provides full disclosure about the business’ worth, asset backing per share and what its ability to generate future income is. “The way we read the case is a quantum of MTF fees charged on a go-forward basis are at risk and it could have liability to refund fees charged in the past,” says Jonas. But MTF says – until its appeal is heard – it’s uncertain as to how unreasonable the fees were and it’s unhappy HNZ wouldn’t sign confidentiality agreements if extra information concerning the case was released. MTF has $40m of perpetual preference shares listed on the NZX’s debt market, which last traded at 68 cents in the dollar.