Merchant Fin. directors advise acceptance

Press, Volume CXII, Issue 32849, 24 February 1972, Page 17

Merchant Fin. directors advise acceptance

The directors of Merchant Finance and Investment, Ltd, announced yesterday that they propose to advise shareholders to accept the offer by Credit Services Investment, Ltd, when the formal bid is received.

In a formal statement the ; directors advised that a substantial interest in the company had been acquired by the Wellington-based finance and insurance group from existing shareholders, including the directors. A major problem facing the company was the drastic curtailment of syndication through circumstances beyond its control, which at the time of its public listing in 1970 was a principal activity of the company.

Also the directors could not forsee a dividend being paid in the current year. For these reasons shareholders, say the directors, ■should be given the opportunity of reinvesting their I money to better immediate | advantage. “The proposed offer would enable Merchant Finance share holders to participate in a sound progressive finance and insurance group of companies, showing excellent earnings and good I growth prospects," conclude I the directors. I The offer is one share in i Credit Services, along with 'loc cash, for every two of

the Auckland company’s shares. This makes the bid worth 78c for each Merchant Finance share which were selling at 80c in Auckland. The offer puts a value of $390,000 on the company, which at the last balance date of March 31 had shareholders funds of $759,000. Commenting on the merchant banking activities undertaken by Merchant Finance in the past year, the managing director (Mr M. D. Johnson) said today that it proved more expensive than anticipated to set up. Also, the time element to get it established, said Mr Johnson, was greater than first realised. He expected. Credit Services would continue the merchant banking side of the business. Mason Struthers and Company, Ltd, of Christchurch, which was taken over in mid 1970, had proved a diffi-

cult “reconstruction,” said Mr Johnson. However, Merchant Finance had stopped losing money around September-October of last year, after it had reported a loss in the first half of the financial year. Merchant Finance was listed in September 1970, with an issued capital of $500,000 in 100 c shares. The company floated to the public 329,000 shares at par.

In the first six months of operations to March 31, the company earned a tax paid profit of $234,963, compared with the pre-tax profit of $lOO,OOO projected in the prospectus. Credit Services would not comment on the reason for the take-over offer, or what they intended to do with the company if they gained control.