KEY POINTS:
Despite the freeze on Hanover funds there were positive developments in the finance company sector yesterday as Speirs Group and Allied Farmers said they would merge their finance operations to create a stronger $400 million company.
Also, Marac announced it had secured $104 million in long-term funding.
NZAX
listed Speirs Group said it had conditionally agreed to sell its Speirs Finance subsidiary to Allied Farmers, owner of Allied Nationwide Finance.
Speirs Group chairman Nelson Speirs said that while the purchase price was $5.6 million, not a lot of cash would change hands and the transaction was essentially "an exchange of assets and liabilities".
Although Allied will pay $3.1 million in cash as well as $2.5 million in new shares. Speirs Group will immediately reinvest $2 million in Allied Nationwide Finance perpetual bonds.
The transaction will create a combined entity with a total loan book of $400 million with about $230 million of that coming from Speirs Group.
Speirs said the combined operation would be strong with both companies having survived the sector turmoil well so far.
"It strengthens the combined weight very substantial."
Commentators have tipped industry consolidation as a reaction to the difficulties which have claimed 25 finance companies in the past two years. But until yesterday there had been little sign of that.
"I think we're the first to be truthful," said Speirs.
While its loan book was bigger than that of Allied Nationwide, Speirs Group had decided to sell to Allied as part of its strategy to concentrate on being an investment company rather than a specialist financier.
Speirs Group's book consists primarily of loans to industrial and commercial borrowers, particularly for vehicles.
"The Speirs Finance lending activities fall within the core business of our own finance company," said Allied Farmers chief executive David Bale.
Allied Nationwide chief executive John Mallon said the acquisition would give his company immediate access to Speirs Group's "significant and successful asset securitisation programme".
Meanwhile, Marac Finance's first ranking five year secured bond offer closed yesterday having raised $104.19 million.
Marac was seeking to raise $100 million but had capacity to accept an additional $25 million in oversubscriptions.
Marac managing director Brian Jolliffe was "extremely happy" with the outcome.
BUSY DAY
* Hanover Finance freezes $554 million of investor money as it seeks to restructure.
* NZAX listed Speirs Group and NZX listed Allied Farmers agree to merge finance businesses to create a company with a $400 million loan book.
* Marac successfully secures $104 million in long-term funding.
