Heartland seeks extra $3 million

The proposed Heartland bank will seek an extra $3 million to take its overall capital raising to $58 million.

This will go toward the $100 million purchase of listed PGG Wrightson's rural loan book, valued at up to $430 million.

PGG Wrightson in June announced it had agreed to sell the loan book to Heartland, which is hoping to be in a position to apply for a banking licence later this year.

The extra $3 million will be offered to institutions and also its share purchase plan to shareholders - at 75c per share.

Heartland said in a statement yesterday it had secured a further institutional commitment for an additional $3 million of equity capital.

Shares in Heartland, which now trade in the NZX top 50, have since the loan book announcement declined from 74c to close at 63c yesterday.

Heartland was formed in January following the $2.2 billion merger of the Canterbury Building Society, Marac Finance and Southern Cross Building Society. The proposed purchase boosts its asset base to about $2.6 billion.

The rural book purchase is expected to lift Heartland's rural lending from about 6 per cent of its book to about 21 per cent, and take it closer to its target clients in providing rural seasonal financing.

A large slice of the minimum $58 million Heartland wants from capital raising, overseen by Craigs Investment Partners, includes PGG Wrightson buying $10 million worth of shares at 75c each. Under the deal, PGG Wrightson would continue to offer financial services to its farmers through a licensing agreement with Heartland.

- Otago Daily Times