Satterthwaite’s ‘no lemon’

Press, 23 January 1988, Page 29

Satterthwaite’s ‘no lemon’

By

MARTIN FREETH

of NZPA

Speculation on the future of Timaru-based brokers Satterthwaite and Co., ended yesterday with a capital injection by United Building Society (ÜBS) which has become the principal shareholder in the firm.

But after announcing the move, ÜBS quashed market rumours that Satterthwaite and Co. would have become another casualty of the crash. The ÜBS managing director, Mr Colin Jenkins, said the long-estab-lished firm, with branches in Wellington and Oamaru, was “no lemon.” He said in an interview that the society had started negotiations with Satterthwaite in the middle of last year as part of a long-term strategy to make sharebroking part of its financial and advisory services to customers.

Talks had paused after the crash in October until the consequences for the brokers were sorted out, Mr Jenkins added. “The difficult part was working out the debtor situation they were in, including the inter-broker and outside client situations,” he said. “With brokers starting to default, the interbroker situation was continuing to change day-to-day.” Mr Jenkins described Satterthwaite as having a very good quality portfolio. “We would be walking away if we were picking up a lemon ... we simply would not be picking up a lemon.” He declined “for commercial reasons” to say how much ÜBS was investing in Satterthwaite or what financial interest it had taken. The firm has been restructured from a partnership into a limited liability

company. Control will, however, remain with the two existing partners, Messrs Derek Satterthwaite and Alan Munro. The two men are members of the Stock Exchange and under exchange rules, they must retain a majority of the voting rights if Satterthwaite and Co. is to remain a member firm. The pair were not available for comment yesterday. An employee at the Timaru office said Messrs Satterthwaite and Munro had had “a harrowing time” recently and were now on holiday. Mr Jenkins said that no changes in the services provided by the company would be made immediately. Satterthwaite and C 0.,, which last year celebrated the fiftieth anniversary of its foundation, is understood to have 34 employees. The next step would be for ÜBS. to look at the

additional resources that the firm would require to become a “bigger and stronger operation,” Mr Jenkins said. Negotiations towards the shareholding move had been conducted with such secrecy that some of ÜBS’s executive did not even know of them, he said. These people had now to be involved. On specific developments, Mr Jenkins said: “We have some ideas in mind and we would like to work through them now.” The Satterthwaite and Co. move had been part of a long-term strategic plan to acquire an interest in a broker. In a statement about it, Mr Jenkins linked the move to the introduction by ÜBS last year of a financial planning service in conjunction with the Australian research organisation, IPAC Securities, Ltd.