Heartland" deal a $2.2 billion whopper to finish the year

Heartland" deal a $2.2 billion whopper to finish the year

LawFuel.co.nz – Law News & Jobs wire - Lawyers Chapman Tripp have been working hard sealing the biggest deal of the year – the $2.2 billion “Heartland” merger that will next month create one of New Zealand’s largest finance institutions.

The deal is a massive commercial and legal project, merging three businesses with assets over $2 billion and bringing together two building societies (CBS Canterbury and Southern Cross Building Society) and a finance company (MARAC Finance Ltd) in a compressed time frame.

The new entity proposes to tackle what it sees as the under serviced banking market for rural businesses, SMEs and general “middle New Zealand” family financing which the new entity proposes to focus upon using what it terms a “customer first” rather than a product-focused approach to its marketing.

The new entity is envisaged to create a strong market position for itself with more secure funding channels available to it, at a lower cost, as well as improved equity capital and increased liquidity.

The documentation for the deal has been vast and complex. Starting with an equity information memorandum, which contains the details of the merger plan, the complexities of the arrangement have thrown up a plethora of issues for lead lawyers Chapman Tripp.

The deal provides for an offering of 300 million shares in the merged entity, the transfer of approximately $1.7 billion of debt securities from 3 different issuers, the conversion of two building societies into companies using Building Societies Act processes and the implementation of a Court-approved Scheme of Arrangement under the Companies Act.

The complex deal has been lead by senior Chapman Tripp commercial partner Barry Brown. “I have had the overall team leadership and strategic role but our two people who have really done the “hard yards” are Tim Tubman (Partner) and Rachel Dunne (Senior Solicitor) in our corporate team - they are in our Auckland Office,” he said to Lawfuel.

While there are mechanisms under the Building Societies Act to merge two building societies and the Companies Act amalgamation procedures allow two companies to merge, there is nothing that deals with the merger of a building society and a company. The merger lawyers have needed to use procedures under both pieces of legislation to accomplish the end goal.

Additionally, there have been votes from 10 security holder meetings required in order to finalise getting the final court orders as the merger – which is due to be completed in the first week of the new year, also provides for a listing at the end of January.

ends

© Scoop Media