Pyne Gould forecasts first-half loss on MARAC underwrite

Friday 13th February 2009

Pyne Gould Corp. said it will post a first-half loss after its MARAC Finance unit called on a $25 million underwriting facility to cover impaired property loans. Its shares dropped 3.9% to $2.50.

Pyne Gould expects a net loss of $13 million to $15 million for the six months ended December 31, the company said in a statement today. It offered the underwriting facility in December to help MARAC to "manage difficult property assets in a timely way."

Since then, "the property market has continued to deteriorate with added uncertainty as to outcomes" and it is prudent to use the facility, it said in a statement.

"MARAC's core business continues to perform well with strong liquidity and solid margins," it said, reiterating its forecast for pretax earnings of $9 million to $11 million.

Property development lending amounted to $250 million at November 30, or about 18% of MARAC's book, according to Pyne Gould figures. The draw down on the facility is more than twice the amount envisaged when the facility was set up, of $6 million to $9 million in the first half.

Pyne Gould is scheduled to release its first-half results on February 27.

By Jonathan Underhill

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