Seniors Money would sell 9.4% Heartland stake when escrow lifts

Tuesday 16th September 2014

Seniors Money International, which sold its 'home equity release' mortgage business to Heartland New Zealand for $87 million this year, would sell the 9.4 percent stake it got in the lender as part payment once a 12-month lock-up ends for the shares.

Auckland-based Seniors, which counts buyout firm Quadrant Private Equity as its biggest shareholder, got $47.3 million cash and 43 million Heartland shares issued at 90 cents apiece for Sentinel New Zealand, the nation’s biggest HER mortgage provider, and Australian Seniors Finance, which has 20 percent of that market.

Of the total, $37.3 million of the cash proceeds must be retained by Seniors under the terms of its debt facilities, pending the sale or refinancing of the company's European businesses. Of that, up to $10 million could be released by lender Commonwealth Bank of Australia provided Seniors achieves certain milestones, according to the company's annual report. The Heartland shares "will primarily be applied to reduce loan note liabilities" once the lock-up ends, it said.

Shares of Heartland last traded at $1.02, giving Seniors a 13 percent paper gain versus the issue price. The stock has climbed 20 percent this year. If Seniors was to sell its stake in Heartland in one tranche, it would be the largest transaction in the stock since the company listed in February 2011, according to Reuters data.

Seniors, which counts former prime minister Jenny Shipley as chair, has businesses in Spain and Ireland and its report for the year ended March 31 says it was in ongoing talks with parties that had expressed interest in buying the European assets. The Spanish and Irish websites for Seniors Money say they are not currently accepting new customers. Other investments include 13 percent of Seniors' Finance in South Africa.

The company's 2014 results treat the sale as post-balance date because it settled on April 1.

Revenue from continuing operations fell to about $16 million in the year ended March 31, from $18.8 million a year earlier. It reported a net loss of $35 million from continuing operations, mainly reflecting a $26 million loan note redemption allowance, from a profit of about $9.9 million a year earlier.

BusinessDesk.co.nz

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