Pyne Gould Corp Ltd made 2 propositions yesterday to rein in a company which manages one of its English assets. Meanwhile Van Eyk Research Pty Ltd, an Australian company which Pyne Gould exited in February, went into voluntary administration on Monday over a separate asset management issue.
Pyne Gould made an offer to lift its stake in Equity Partners Infrastructure Co No 1 Ltd (Epic) from 27% to up to 49%, and managing director George Kerr proposed that he & fellow Pyne Gould director Russell Naylor replace 2 of Epic’s 3 directors, leaving just independent director Murray Tonkin to continue. Mr Gould has asked for a special meeting to vote on it.
He said the company needed to reduce heavy administration costs and instead focus on minimising debt & creating shareholder value.
“Epic is a simple company with a single investment – a minority (17%) stake in Moto, the UK’s largest motorway service area company, which has excellent prospects as the UK economy recovers and Moto navigates the restructuring of its balance sheet.
“In the interim, however, Epic’s own debt & costs need to be kept to a minimum. Pyne Gould has serious concerns that these are getting out of control. We know other Epic shareholders share these concerns.
“Requesting board changes is an unusual step but it has been triggered by our concern over Epic’s recent announcement that it has arranged a loan of about $10 million for working capital purposes.
“What was not disclosed to Epic shareholders was that this loan from Deutsche Bank has charged all the assets of the company. There has been no coherent explanation provided as to why the entire company has been put at risk to fund operating costs, which appear to be predominantly payments to directors.
“We do not believe that this level of costs is required to run Epic over the next few years, given Epic’s size and that it is a non-trading holding company with a single investment. Borrowing $10 million for 3 years’ working capital is not, in our view, justifiable or prudent.”
The formerly Christchurch-based & NZX-listed Pyne Gould, now based in Guernsey, has been reviewing its timetable for listing in London and Mr Kerr expected to make an announcement at the time of its annual report, to be distributed by the end of September.
Pyne Gould sold 3 Perpetual companies to Van Eyk in early 2013 and also sold its 27% stake in Van Eyk, settling the final part of the transaction in February.
The Perpetual companies have been rebranded – Perpetual Portfolio Management is now van Eyk Advice NZ and Perpetual Asset Management is Blueprint Investment Management.
The trouble at Van Eyk that led to administration concerned a $31 million investment by one of its funds, through London hedge fund the Artefact Group in 2012. Van Eyk & its responsible entity, Macquarie Investment Management Ltd, revealed on 6 August that the $A95 million Blueprint international shares fund couldn’t make redemptions because of this illiquid investment.
By 4 September, Macquarie had been forced to close 13 of the 14 funds in the Blueprint series. On Monday, Trent Hancock, director of accountancy firm Moore Stephens’ Sydney corporate recovery group, was appointed administrator.
Attribution: Company releases, Australian media, Pyne Gould reports.