KEY POINTS:
New Zealand Rugby Football Union chairman Jock Hobbs, with a consortium comprising senior management and the Bank of Scotland International, is to buy back Strategic Finance from troubled Australian investment company Allco.
The consortium, which includes Hobbs, other executive directors Graham Jackson and Marc Lindale as well as chief executive Kerry Finnigan, confirmed they had agreed indicative non-binding terms with Allco HIT to buy the company.
A specialist property development lender, Strategic was founded by Hobbs in 1999 and was sold to Allco in two chunks with the purchase completed in March last year with the $225 million purchase of the remaining 50 per cent.
However, a change in Strategic's ownership has been in the offing since Allco HIT's controlling shareholder, the investment bank and funds manager Allco Finance Group, announced a major strategic review this year amid discussions about its own bank funding lines in the wake of the global credit crunch.
BOS International would have an initial 19.9 per cent shareholding, with the ability to increase to 49 per cent to reflect its financial contribution. The original owners and senior management would hold the balance of the shares in the consortium.
Finnigan said the price the consortium was paying was confidential but it was safe to assume it was less than what Allco paid.
A key aspect of the deal is that BOS International will increase the wholesale facility it presently extends to the company to $150 million.
Strategic has $639 million in assets and owes about $325 million to about 15,000 debenture investors. Debenture funding for finance companies has largely dried up after the string of collapses in the sector.
"Having someone like Bank of Scotland joining us and providing the funding that they are has got to be huge comfort for everybody, particularly with some of the finance company news we've been receiving of late," said Finnigan.
The proposed ownership change should ensure Strategic's long-term future despite the difficulties facing the sector, he said.
"Despite current market conditions, history has shown that the need for strong finance companies in New Zealand will not disappear. We have every confidence that the change of ownership will ensure that Strategic Finance will be one of the companies servicing this need."
The acquisition is subject to due diligence which should be completed by the end of the month with the sale scheduled for completion by the end of September.
Strategic Finance
* Founded in 1999 by former All Black captain and current NZRFU chairman Jock Hobbs.
* Specialises in property development finance particularly mezzanine finance.
* Total assets of $639 million.
* Owes $325 million to about 15,000 debenture investors.
