Viking Capital promoters set to reap millions

The promoters and directors of Viking Capital, which is looking to raise $15 to $20 million this month, look set to reap millions of dollars, the prospectus out today reveals.

Chairman Brent King and director Grant Baker say the investment company owns no business.

Other than to say the company was "monitoring six or seven situations", Mr King won't say what Viking will invest in.

The promoters stand to make tens of millions of dollars if milestones and incentive objectives outlined in the prospectus are met.

The offer is for 60 million shares at 25c each with an over subscription facility of 20 million shares. The company plans to list on the NZX alternative market on June 23.

"We have no commitments at this stage. We do not have a business at this point so we don't have any profit forecast," Mr King, the former principal and managing director of listed Dorchester Pacific, told NZPA by phone from his "personal resort" in Cairns.

The prospectus has few details on investments but is more illuminating on the director and promoter benefits.

It says Viking intends to "access investments that assist the company to produce superior returns".

It "intends to operate with a broad, flexible and aggressive investment mandate; will utilise the proven business experience of its key personnel to originate, execute, manage and add value to investment opportunities".

The major investment focus will be New Zealand, "but funds may nevertheless be invested in overseas markets".

Mr King, 50, a director of Charlies, Finzsoft and 42 Below -- companies he had helped float -- plans to invest $5m for a one third holding.

Fellow director Mr Baker, chairman of vodka company 42 Below, will invest $1.65m for a 8.3 per cent stake and the third director, former finance minister Sir William Birch will invest an unspecified "substantial sum".

Mr King will receive 10m "founder warrants" exercisable at 30 cents and Mr Baker 3.3m. There be another 5m warrants to be allocated at the company's discretion to incentivise non-executive directors.

Like other investors, Mr King and Mr Baker will also receive one warrant for six shares issued exercisable at 25 cents each.

The prospectus says Viking will be heavily dependent on Mr King's investment skills.

He will receive a $125,000 salary in the first year rising to $225,000 in the second year. He will get the use of a $120,000 car and receive eight weeks annual holiday.

Under the management contract, Mr King and Mr Baker will collectively collect a 1.5 per cent fee each time capital raising milestones of $20m, $$25m, $30m, $50m, $75m, $100m and $150m are met. If the $150m is raised the pair will pocket $20m.

Mr King will also be paid 5 per cent of Viking's annual net profit before tax if it is above the average bank bill rate plus 7 per cent.

Mr King noted returns at Dorchester Pacific averaged 25 per cent over the 20 years he was involved.

Mr Baker and Mr Birch will share directors fees of $180,000 per year.

Commenting on the lack of detail in the prospectus, Mr King told NZPA these days investors backed people rather than took notice of the prospectus.

"It's trickier, but I've always found it's the people you are going to back anyway. People understand what the product's about."

He said he was getting grass roots support from investors who liked what he had done in the past.

Rather than naive 18 year-olds, "astute, competent investors over 55, who have a few dollars and treat investment as an interest", were showing support.

The highly fragmented finance company sector was expected to be a target for Viking, although it would not compete directly in the sector.

Mr King said that with many finance company prospectuses, "people were told what they thought they were investing in, and they turned out to be something substantially different.

"At the end, your faith is honed back to the individual people and their judgements as opposed to what a prospectus may or may not say.

"New Zealand was littered with mistatements and prospectuses, I think people are now moving to the quality of the people involved."

He criticised the "ludicrous lending" going on in the finance sector and predicted more casualties and rationalisation.

Mr King has sold three quarters of his Dorchester stake and now just holds 5 per cent of the company.

"I've voted with my feet."

- NZPA