MTF on HNZ ‘approach’
The board of Motor Trade Finance Ltd (MTF) says it has become aware that Heartland New Zealand Ltd – or MARAC or their agents HNZ – has been “engaging with selected MTF shareholders”. The announcement to the NZX made by MTF states its board believes this relates to a recent proposal by HNZ to acquire MTF that was rejected by MTF’s board. “In the interests of ensuring all shareholders are equally informed and correcting any misinformation that may exist across the MTF shareholding base, the board believes shareholders should be aware” of certain matters,” the announcement, issued on July 21, states. In it, MTF chairman Stephen Higgs says: “HNZ had approached the board of MTF the prospect of making an offer to acquire MTF. These approaches culminated in an undated draft written proposal from HNZ received in early May 2014. “After taking legal and commercial advice, the board formed the view the proposal in the form received was without merit as to the indicative price and in other respects. The proposal was highly conditional and incapable of acceptance. After taking advice, the board formed the view the proposal didn’t require disclosure at that time. “The nature of the proposal revealed HNZ holds a materially different view than MTF’s board as to the potential impact on MTF from a High Court case brought by the Commerce Commission, in which the High Court finding of breaches of the Credit Contract and Consumer Finance Act 2003 – in respect of credit fees charged in 39 contracts originated by Sportzone Motorcycles Ltd (in liquidation) – is subject to appeal. “The board offered to engage further with HNZ to see if an appropriate proposal to put to shareholders could be agreed. This would have involved sharing MTF’s confidential information regarding the Commerce Commission’s case and other information with HNZ under confidentiality.” Higgs says MTF failed to agree a basis for moving forward with HNZ because the latter “was not prepared to accept confidentiality arrangements and undertakings we regarded as appropriate, and HNZ failed to indicate a willingness to reconsider its indicative price”. Discussions then stopped and Higgs says the board is aware HNZ has been engaging with “selected MTF ordinary shareholders”. “As mentioned in our announcement on July 16, MTF has received a letter from a group of ordinary shareholders requesting MTF convenes a special meeting of ordinary shareholders,” says Higgs. “The resolutions effectively request the MTF board to make public the information HNZ was seeking.” MTF believes the proposed resolutions and supporting statement contain “some errors of fact and assumptions, and has proposed to meet with the proposing shareholders – prior to issuing a notice of meeting – to address those errors and discuss their proposed approach more generally”. Higgs adds: “MTF expects to issue a notice of meeting setting out the resolutions and your board’s response as soon as practicable after that meeting. We will provide more detail when the notice of meeting is issued.” In the interim, Higgs says shareholders should note MTF’s board wishes to ensure shareholders “do not have misleading or confusing information regarding Commerce Commission issues and the outlook for MTF”. He adds: “The board has not viewed the communications between HNZ and selected shareholders but, based on the views expressed by HNZ to MTF’s board, the board does not agree with the assumptions underlying HNZ’s views and does not regard the proposal recently presented as having merit for MTF’s shareholders or originators in its current form. “Any views HNZ expresses about MTF’s business or financial position must be considered in light of the fact HNZ is a competitor and potential acquirer. “If HNZ wishes to make an offer for the shares in MTF, it should do so under the Takeovers Code. If it wishes to develop a transaction proposal to take to MTF shareholders and originators, the appropriate channel is through the MTF board under confidentiality arrangements. “The board is happy to work with HNZ on a proposal it considers has merit for shareholders and through a process that’s acceptable. To date, no such proposal or process has been put forward.” MTF’s board says it will update shareholders if there are any “meaningful developments” in relation to HNZ. “In the meantime, the board advises shareholders do not make any undertakings to any party regarding the pending special meeting until after the notice of meeting and explanatory detail have been issued,” says Higgs. He advises shareholders against making any undertakings to HNZ or any other party in regard to MTF shares before MTF’s board has received and reviewed any formal proposal, taken advice and is able to make a recommendation. MTF shareholders should “treat any communications from HNZ with caution, given that it’s a competitor and potential acquirer,” says Higgs. He adds the next steps for the MTF board include meeting with the proposing shareholders in relation to the special meeting and resolutions they wish to put, and issuing a notice of meeting and further explanatory notes to its ordinary shareholders.
