Hawkins to delist, cash up Cynotech Holdings

Allan Hawkins. Photo / Dean Purcell

Cynotech Holdings head Allan Hawkins wants to delist the finance company from the stock exchange through a takeover by an associated company.

Cynotech Securities Group, of which Hawkins is a director, yesterday lodged an official takeover notice for Cynotech Holdings - a company which Hawkins chairs, in a bid to privatise and cash up the listed minnow.

Cynotech Holdings, which owns a number of businesses including consumer finance company Budget Loans, icecream cone maker Snowdon and mobile satellite communications firm Cynotech Satellite, has made a name for itself by buying up the loan books of failed finance companies including National Finance and Western Bay Finance.

But yesterday Hawkins said the reasons behind his privatisation plans were linked to the fragility of the finance sector and negative perceptions held by the public.

He said Cynotech Holdings had come through the "machinations" in the finance sector unscathed but the group could not see an immediate path to growth in the sector.

"The CHL directors have already said publicly that they believe that the small finance company sector will not start to improve for at least the next two years."

Hawkins also said there appeared to be no benefit to having the company listed.

"Due to the current adverse public perception of the finance sector it is not probable that the NZX listing will be of any advantage to CHL Group as a funding mechanism in the near future."

Cynotech Holdings tried to raise $10 million in new capital to help finance its Budget Loans business in October last year but is believed to have scraped together just $2 million.

The company also came under fire for not disclosing Hawkins' convictions in its fundraising prospectus. Hawkins was sentenced to six years' jail in 1993 on seven fraud and conspiracy charges on transactions worth $520 million after one of the longest and most expensive trials in New Zealand history.

Yesterday Hawkins denied the plan to privatise the company was linked to the scrapped capital raising. "No, it wasn't that although the results of that were pathetic - there's no other word for it."

He said the alternative would have been to raise money from debenture investors.

Hawkins believed cashing up the listed company would allow shareholders to invest their own money in a more "personally orientated and profitable way".

Under the offer Cynotech Holdings shareholders would get one preference share in Cynotech Securities Group which Hawkins valued at 13.5c per share - a figure well above the 8.5c share price the company last traded at on the exchange.

Investors in the private company would receive up to 8 per cent per annum on their investment until the shareholding was realised in cash. But Hawkins could not say when shareholders would get their money back or how much of it.

"It is obviously a moving target. Sooner rather than later. But there is no timeframe and no guarantees," he said.

Hawkins first notified the market of his intentions to make a takeover offer in November and made it official on December 18.

Hawkins said the first offer, which was pulled before Christmas, had struck problems with the Takeover Panel but it believed they were now cleared up.

Cynotech Holdings managing director Brett Tawse said the company would appoint an independent firm to look into the bid once the full details of the offer were known. "We can't complete it until we have the full offer."

That is expected to be filed on February 2.

The listed company has around 1000 shareholders - the largest of which are Waiheke Island couple Philip and Pamela Briggs who have a 16.5 per cent stake.

Hawkin's affiliated firm Newmarket Securities is the second largest shareholder on 10.5 per cent and his Cynotech Securities company is third on 10.4 per cent.

Asked if it was the last time he would be involved in a publicly listed company Hawkins said: "It could be." He turned 68 a month ago and said he wanted to spend more time with his wife and family.