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MFS New Zealand is expected to make an announcement within the next day on what will happen to its business after a strategic review of financially troubled MFS Australia, which owns 38.5 per cent of the New Zealand business.
Yesterday MFS New Zealand asked to be placed in a 48-hour trading halt to allow it to assess the "uncertainty" concerning the Australian parent company.
The New Zealand company said the uncertainty was a consequence of the unexpected resignation of Australian CEO Michael King, who has since been replaced by his deputy, Craig White, and a strategic and ownership review of its operations.
It also linked it to MFS receiving a number of offers for its tourism business Stella Group, which owns Gullivers Travel and its subsidiaries Holiday Shoppe and United Travel in New Zealand.
But both of the announcements occurred nearly two weeks ago, on January 21, when the Australian company was placed in a trading halt after a 69 per cent drop in its share price over debt concerns by investors.
MFS stapled security MFS Living and Leisure, which is listed in both New Zealand and Australia, was also placed in a trading halt then. But MFS New Zealand has continued to trade.
MFS in Australia had advised the New Zealand company that it would be informed about the results of the strategic review on a timely basis and it expected to make a further announcement to the NZX within 48 hours, the statement said.
MFS New Zealand would not comment further on why it had taken so long to react to the uncertainty of its Australian shareholder.
MFS New Zealand listed in July last year. Its main interest is finance company MFS Pacific Finance but it also manages the financial advisory firm Vestar on behalf of the Australian company.
Financial statements for the six months ending in September last year show MFS New Zealand had around $272 million in secured debentures and unsecured notes. It also had nearly $150 million in related party loans.
Following the finance company collapses last year the Australian company said it would support MFS Pacific Finance in the event that it required help to repay debenture holders.
It reiterated its commitment just before Christmas. Around $27 million in debentures were due to be paid back to investors last month and a further $54 million is due for redemption over the next two months.
Meanwhile, rumours in the Australian press over the past few days said a decision on the sale of the Stella Group was expected by the end of this week.
MFS said last Wednesday it was in talks with a number of groups concerning the sale of a major stake in Stella and that it hoped to reach an agreement within two weeks.
It has not confirmed the identity of the potential bidders, but private equity group CVC Asia Pacific is thought to be the leading bidder as it tried to buy the business last year but could not reach an agreement on price.
MFS needs to sell the tourism business to meet its short-term debts. Last week MFS said it had total debts of A$1.687 billion - A$220 million of this is due in under three months.
The Business Herald understands an announcement was expected to be made from Australia by the end of yesterday.
A spokesman for MFS would not confirm whether an announcement was due.
