Pyne Gould sells Epic stake after failing to gain control of the board

Thursday 23rd October 2014

Pyne Gould Corp, the asset management firm controlled by managing director George Kerr, has sold its 27 percent stake in Equity Partners Infrastructure Co No 1 after failing to take control of the investment company and oust its board.

The Guernsey-based company sold its entire 41.89 million shares of Epic, at 30 British pence per share netting 12.6 million British pounds, it said in a statement. In New Zealand dollar terms it equates to 60 cents per share, or $25.4 million, and was 60 cents above Pyne Gould's carrying value for the investment which will be reflected in its results to June 30, 2014, it said.

The firm had wanted to lift its holding in Epic, which has a minority stake in UK motorway operator Moto, to 49 percent so it could sack the board and force it to cut administration costs and focus on minimising debt to increase shareholder value. It also wanted to finance the company through a related entity. Pyne Gould was planning to offer Epic shareholders Pyne Gould stock, which would have diluted Kerr's stake to 67 percent from 80 percent.

The Epic board advised shareholders against Pyne Gould resolutions to oust the directors, and warned investors Pyne Gould's offer of funding was unusual and not in Epic's best interest.

"Following the recent takeover of Epic by United Kingdom interests, Pyne Gould no longer has the opportunity to control Epic and, therefore made a pragmatic decision to sell its stake to those interests associated with Epic Investor LLP," Pyne Gould's Kerr said.

The firm said it also reached a settlement with Epic, ending litigation in the High Court of England and Wales over Epic's repayment of a 525,000 pound loan which Pyne Gould claimed was due on or around May 9 with an 8 percent annual interest rate. Epic repayed Pyne Gould the amount, and waived its $2.6 million counter claim over outstanding payments owed by Kerr's firm. Pyne Gould paid Epic $380,000 in legal costs, it said.

Pyne Gould and Kerr have been closely linked with the Epic fund over the years, terminating its management contract in 2012 with an $8.9 million payment after it was advised Kerr's takeover would trigger pre-emptive rights in the shareholders' agreement for its 17.5 percent stake in UK motorway service operator, Moto.

The firm relocated to Guernsey, a British Channel Island often described as a tax haven, at the start of this year as part of its exit from New Zealand to focus on Australian and UK investments. It plans to list on the London Stock Exchange, where it believes it will have better growth prospects.

Trading in Pyne Gould's shares was suspended on Oct. 9 by the stock market operator and regulator, after the firm failed to lodge its annual report by the required deadline. The firm had expected to release the report by mid-October, and said today it would update the market on its audited annual report by the end of this week.

Before being suspended the shares last traded at 38 cents and have declined some 21 percent since the start of the year.

BusinessDesk.co.nz

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