PRG shelves float plan in face of slipping share prices

Eric Watson's Pacific Retail Group has shelved plans to float its consumer finance group, citing fears about investors' appetite for a new issue in a weakening sharemarket.

PRG had also received a number of indicative bids for the business and would instead pursue this option.

It is selling the business because it wants to use the cash to help prop up its money hungry British appliance retailer, PowerHouse. Its other major division, lingerie-maker Bendon, also needs more cash to grow.

Acting chief executive Steve Smith said PRG's advisers, Macquarie New Zealand, had warned that big investors would be wary of the finance division float at a time when the benchmark NZSX50 had fallen from a peak of 3238 in March to yesterday's close of 3080.81. This would have left the company relying on the retail market.

"This was a real risk factor," Smith said.

PRG's decision to abandon a float follows the NZX acknowledging that retail investors were pulling out of the market, spooked by the decline.

Watson and PRG had hoped to keep a majority shareholding in the business, but in March Macquarie told the company it would get full value only if it sold the business outright.

Observers took this to mean that investors were wary of Watson.

PRG would shortlist the as-yet-unnamed bidders for the finance division and hoped for final offers in the second half of July. It needs shareholder approval to complete the deal.