Liberty sues NZF claiming breach of Mike Pero Mortgages JV
Liberty Financial is claiming NZF Group has breached the terms of their Mike Pero Mortgages joint venture.
Wednesday, February 15th 2012, 5:35PM
by Jenny Ruth
NZF chief executive Mark Thornton says the Australian non-bank lender has started legal action in the High Court against his company but NZF believes its claim is without merit and will vigorously defend all claims made by Liberty.
"NZF believes that the action taken by Liberty is an unwarranted attempt to force NZF to compulsorily transfer its shareholding (in Mike Pero Mortgages) to Liberty which would be required if NZF had triggered an event of default under the joint venture agreement," Thornton says.
Thornton says his company would be prepared to sell Liberty its 50% of the mortgage broking business if Liberty was prepared to pay fair value but the legal action appears designed to allow Liberty to gain the stake on the cheap.
"We would definitely consider it. We've found owning half of something isn't good enough and they're not easy people to deal with," Thornton says.
While confident NZF will prove Liberty's claim to be without merit, he is concerned about the potential damage the dispute could do to the Mike Pero Mortgages brand, even though the dispute has nothing to do with the mortgage broker's operations or those of its franchisees.
"We can't do anything about that other than to assure everybody it's just a shareholder matter."
Currently, Mike Pero Mortgages is operating profitably and is self-sustaining, he says.
Even with all his company's difficulties last year, when it was negotiating to sell 80% of its home loans origination business to another Australian non-bank lender, Resimac, and dealing with the receivership of its finance company, NZF Money, in July, NZF has continued to support the joint venture.
That included finding its share of the cash to fund the mortgage broker's move into the real estate market last year, Thornton says.
NZF is also providing the mortgage broker with accounting expertise and tax advice.
Meanwhile Resimac says it isn't yet in a position to provide any timetable for its launch in New Zealand - it settled the deal with NZF just before Christmas.
However, Resimac's New Zealand general manager Dugald Morrison says he's pleased with the progress his company has made.
"We are working on creating an enhanced offering specifically catered for the New Zealand market and are committed to providing superior customer service and support to our borrowers," Morrison says.
| « Falling rates stimulate greater interest in fixed-rate mortgages | Liberty says legal action against NZF in Mike Pero Mortgages' best interests » |
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