Vestar Rotorua office abandoned

With a month to go before Gould Holding's offer for Vestar goes unconditional the Rotorua branch of the beleagured financial advisory chain has shut its doors.

Wednesday, June 18th 2008, 5:35AM

by David Chaplin

Vestar Rotorua was formerly known as Jones Financial Services before its then owner, Peter Jones, sold out to the Australian MFS group late in 2006.

The Jones business, which managed about $30 million, was valued at $681,132 in the Vestar March 31, 2007 accounts but the books also carried an impairment to the firm of about $71,000.

Jones left the advisory firm he created in September last year, handing over to Vestar appointees Malcolm Thomas and Paul Manning.

Jones now runs a rental car business and Thomas is an adviser with ABN Amro Craigs in Rotorua. It is unclear where Manning has gone.

Jeff Staniland, Gould strategy director and Vestar CEO in-waiting, said the Rotorua closure would not affect Gould's takeover offer.

According to Staniland, Gould has written to all Vestar clients, including those managed by the Rotorua office, seeking their sign off on a new portfolio management agreement.

He said just over 20% of clients had agreed to the deal with a steady stream of acceptances coming in every day.

Gould entered into a six-week due diligence period on June 5 with Vestar, hoping its 0.1% fee reduction for one year would swing clients in favour of the offer.

Staniland said while Gould has set a minimum level of client acceptances in its agreement with Vestar the takeover could still proceed if the final numbers fall short.

"We'd take a harder look at the costs if that happened," he said.

MFS (now Octavier) valued Vestar at over $80 million but earlier this year said it might have to write down that to nil. It is understood Gould's offer for the advisory firm would come in under $10 million.

In the Vestar information memorandum issued in March this year the group claimed $850 million in funds under management. However, almost $300 million of that sum was invested in finance companies in administration or under moratorium. The document also revealed a further $12 million of Vestar client investments were tied up in the now frozen ING Diversified Yield Fund.

David is editor of ASSET Magazine.

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