Heartland Bank restructure clears final hurdle, dual listing on ASX to take place on November 1

Heartland Bank's corporate restructure has cleared its final hurdle, with the High Court rubber-stamping the bank's plans, and a secondary share market listing in Australia set for November 1.

The restructure will be implemented on October 31, Heartland says. Shareholders previously approved the restructure, at the bank's annual meeting on September 19, and the Takeovers Panel has confirmed it has no objection to the scheme of arrangement approved by shareholders, Heartland says.

The restructure will leave Heartland's burgeoning Australian reverse mortgage business free from the capital requirements of regulators on both sides of the Tasman, and subject only to the oversight of the group’s own governance and lenders.

As interest.co.nz has previously reported, Heartland’s Australian reverse mortgage business isn’t subject to Australian Prudential Regulation Authority capital requirements because it’s not an authorised deposit taking institution (ADI) in Australia and has no plans to become one. Heartland is the third biggest and fastest growing reverse mortgage lender in Australia and operates under an Australian Securities and Investments Commission licence. 

 Heartland Bank is to become a wholly owned subsidiary of a new company, Heartland Group Holdings. Shares in Heartland Bank will be exchanged with new shares in Heartland Group Holdings on a one for one basis, and the group’s Australian companies will be transferred from Heartland Bank to Heartland Group Holdings.

The transfer of the Australian Group companies from Heartland Bank to Heartland Group Holdings will result in the Australian business no longer forming part of Heartland’s “banking group”, which comprises Heartland Bank and its current subsidiaries. Resulting from the restructure, Heartland will have a banking group regulated by the Reserve Bank (including its NZ reverse mortgages) and a non-banking group, not regulated by the Reserve Bank.

ASX Limited (ASX) has approved Heartland Group’s application to list in Australia under a Foreign Exempt Listing. Heartland says this secondary share market listing will give it access to equity capital from a much bigger share market than the NZX.

"As part of the implementation process for the restructure, a trading halt will be applied to Heartland Bank’s shares after close of trading on Friday 26 October 2018. The trading halt will apply until the restructure takes effect on 31 October 2018, at which point Heartland Bank’s shares will be acquired by Heartland Group Holdings Limited (Heartland Group) and will no longer be quoted on the NZX Main Board. Once the trading halt is applied, shareholders will be unable to sell their shares in Heartland Bank until their new shares in Heartland Group commence trading on 1 November. The number of Heartland Group shares that will be issued to shareholders will equal the number of Heartland Bank shares held by shareholders at 5pm on 30 October 2018," Heartland Bank says.

"Heartland Bank is also pleased to advise that ASX Limited (ASX) has approved Heartland Group’s application for admission to the official list under a Foreign Exempt Listing. ASX’s approval is subject to the restructure being implemented and the provision of the usual pre-listing disclosure information. Shares in Heartland Group will commence trading on the NZX Main Board and ASX on 1 November 2018 under the ticker code ‘HGH’. Heartland Group’s primary listing will be on the NZX Main Board."

"Shareholders will receive one Heartland Group Holdings Limited (“HGH”) share for every 1 Heartland Bank Ltd ("HBL") share held on the Record Date. At close of business on Friday, 26 October 2018, HBL Ordinary Shares will cease trading. Heartland Bank’s Unsubordinated Notes (“HBL010”) will remain listed on the NZX Debt Market. HGH will list and have its ordinary shares quoted on the NZX Main Board on Thursday, 1 November 2018," Heartland Bank says.

Holders of Heartland Bank's A$20 million of subordinated Tier 2 notes have approved an amendment to the terms of the notes enabling their redemption, which will happen in sync with the restructure on October 31.