Mike Pero offer gets the nod

Former Wall St dealer Sherman Ma heads Melbourne-based Liberty. Picture / Martin Sykes

Mike Pero Mortgages' independent director has advised shareholders to accept New Zealand Finance and Liberty Financial's offer for the shares and options in the company they do not already own.

NZ Finance and Liberty between them own more than 95 per cent of Mike Pero Mortgages and have formed joint venture MPMH to take over, delist and operate the company.

MPMH has offered $1.10 each for the remaining shares and 4c each for 65,000 options which remain on issue.

In Mike Pero Mortgages' target company statement released yesterday, the sole member of the company's committee of independent directors formed to evaluate the offer, Abigail Foote, said she had "no knowledge of any likely higher value offer" for the shares from MPMH or any other party.

MPMH would be entitled to mop up remaining minorities compulsorily in any case, said Foote.

A draft report from Horwath Porter Wigglesworth last month valued Mike Pero Mortgages shares at 88c to 95c. A previous Staples Rodway report found that MPMH's offer for the options, owned by a handful of Mike Pero Mortgages franchise holders, was "fair and reasonable". Mike Pero Mortgages shares last traded at $1.06.

When MPMH's offer was sent to shareholders on August 21, Liberty held a 19.9 per cent stake and NZF 74.7 per cent.

Under the offer, NZF and Liberty will sell their stakes into MPMH which they will own 50-50. NZF stands to make a tidy profit from selling down its stake, which it built up at prices well below the offer.

According to a notice filed yesterday, MPMH had crept to 95.8 per cent of Mike Pero Mortgages' shares.

MPMH was forced to make a second offer for Mike Pero after it first hit Takeovers Code snags relating to its owners' sale of their stakes to their subsidiary and also the right of minority shareholders to refuse the offer or challenge the price.

But the Takeovers Panel has granted MPMH exemptions which allow the offer to proceed while guaranteeing minority shareholder rights.

Melbourne-based Liberty, headed by former Wall St dealer Sherman Ma, specialises in providing loans to borrowers who do not meet bank lending criteria and, like NZ Finance, already provides financial products to Mike Pero.

NZ Finance and Liberty plan to implement "various business arrangements" which will see Mike Pero Mortgages establishing a securitisation structure to originate Mike Pero-branded mortgages and new financial products.

NZ Finance shares were down 4c at a $1.60 yesterday.

THE DEAL

* New Zealand Finance and Liberty Finance's joint venture, MPMH, has been granted two exemptions by the Takeovers Panel allowing the offer to go ahead.

* MPMH has offered $1.10 a share for the 4.2 per cent of Mike Pero Mortgages it does not already control and 4c each for 65,000 options on issue.