Continuous disclosure

The yields on Pacific Retail Group bonds show investors do not regard the sale of the company's finance arm as a done deal.

They also illustrate investors' doubts about the purchase - announced in September 2003 - of the PowerHouse chain from receivers in the UK.

The low liquidity of the bonds may also be a factor in price movements, such as the spike seen on this chart in August last year.

As the price of a bond goes down, the yield goes up. PRG issued 63.7 million bonds in 2002 at an interest rate of 9.25 per cent.

The chart shows how the yield lifted - or the bonds got cheaper - after the uncertainty created by the purchase of PowerHouse.

Last September, the company said it would start buying back the bonds, which it believed were trading at unrealistically low prices. The yield had blown out as high as 14.75 per cent. From September 22 to March 11, the company acquired 1,012,000 of them.

PRG plans to buy back outstanding bonds with some of the proceeds of the sale of its consumer finance division. A source said this week that due diligence was ongoing for trade and private equity bidders, although one possible, Gresham Private Equity of Australia, publicly flagged its lack of interest.

PRG's most recent public statement said final bids were due in the second half of this month although the Business Herald was told the timetable had since slipped by "a couple of weeks".

Someone who thinks the bonds are a good buy is PRG chairman Maurice Kidd. He last month paid $238,000 for bonds with a face value of $250,000 - buying them off-market from Eric Watson, the majority shareholder of PRG.