Listed investment firm Pure New Zealand announced yesterday that it is buying Lombard Finance & Investments for $50 million, and that the merged company will be called Lombard Group.
The deal is subject to two-way due diligence and shareholder approval. Lombard, which has a number of former politicians on its board, has been in the news recently in a court case where it is accused of misleading investors in a couple of contributory mortgage schemes.
Pure NZ will issue 2 billion shares at 2.5c (the last traded price), taking its total shares on issue to 2.157 billion. At the same time, a 50:1 capital reduction will reduce shares on issue to 43.14 million shares.
The purchase will make Pure New Zealand “a growing, focused and profitable business,” says the company executive chairman Ian Smith.
“This will be a new and pleasing experience for Pure New Zealand shareholders who have not been involved with profitable activity for a number of years."
Smith views the implementation of this transaction “as an excellent move into the growing secondary finance sector of the New Zealand economy.”
Lombard posted an after-tax profit of $4.58 million for the year to June 30. On completion, current Pure New Zealand shareholders will own about 4.1% of the new business, and shares to be issued to creditors to convert debt to equity at an upcoming general meeting will comprise 2.1%.
Parties related to Lombard Finance will own approximately 85.5% of the expanded capital of Pure New Zealand and another, unnamed party will own about 8.3%.
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