Heartland Bank is planning a corporate restructure and a listing on the Australian securities exchange which it says will help it grow.
"The restructure will remove constraints on the growth of group’s business currently arising from Reserve Bank regulations, and will provide greater flexibility for the group to explore and take advantage of future growth opportunities in New Zealand and Australia outside the banking group regulated by the Reserve Bank," it said in a release to the New Zealand stock exchange.
Under the restructuring, which requires High Court and shareholder approval, Heartland Bank will become a wholly-owned subsidiary of a new listed parent company, called Heartland Group Holdings.
Existing shareholders’ shares in Heartland Bank will be exchanged with new shares in the new listed parent on a one-for-one basis and the Australian group companies will be transferred from Heartland Bank to the new listed parent.
The Australian business includes part of its reverse mortgage business, something that has grown steadily since it bought Australian Seniors Finance in 2014. Heartland's reverse mortgage loan book has grown to more than $1 billion, of which more than half is in Australia.
The Auckland-based bank, formed through the merger of Marac Finance with the Canterbury and Southern Cross building societies, said it has been considering a foreign exempt listing on the ASX for some time "as it believes this will provide access to additional sources of capital for future growth opportunities."
The restructure will facilitate an ASX listing by the new listed parent, so Heartland intends for this to occur at the same time as the restructure takes effect, it said. The primary listing will be on the NZX Main Board.
It will now file an application with the High Court of New Zealand seeking initial orders that, if granted, will allow the restructure to be voted on by shareholders at the annual shareholder meeting on Sept. 19 in Auckland.
In addition to shareholder approval, the restructure is subject to formal non-objection from the Reserve Bank, which Heartland said it has received.
Heartland has engaged Cameron Partners to prepare an independent adviser’s report on the restructure. It has also resolved to cancel 440,677 shares held as treasury stock. This reduces Heartland’s total number of shares on issue to 560,147,250.
At the end of 2015, Heartland New Zealand amalgamated with its wholly-owned subsidiary, Heartland Bank, to create a more efficient structure. That amalgamation brought all of Heartland's businesses into the banking group, including the Australian reverse mortgage business.
Heartland shares were recently up 0.6 percent at $1.72 and have fallen 18 percent so far this year.