The Taranaki Community Accountability Society (TCAS) was formed to fight the deal which will see Heartland paying a nominal $620 million, but none of that in cash, to become TSB Heartland Bank.
TSB’s current owner, Toi Foundation, will become a 17.5% shareholder of Heartland. Kevin Landrigan, one of three executives elected to lead TCAS, told BusinessDesk that some of the group’s smaller backers aren’t willing to commit to paying damages.
“As soon as there's damages, there's no real interest in pursuing an interim injunction,” Landrigan said.
“People will not have the risk appetite for that.” So TCAS is hoping to persuade several wealthy individuals to financially cover damages linked to an injunction. The other two TCAS executives are Elaine Gill, TSB’s former chair, and Aorangi Bobbie Matsuda.
Landrigan, a chartered accountant, said his group understands potential damages could range from $50,000 to $100,000.
Lawyers have said that those seeking interim injunctions of the nature TCAS wants are usually required to provide an undertaking as to damages to protect the defendant, Toi Foundation.
Landrigan said that if TCAS succeeded, it would ask Toi Foundation to cover the costs. TCAS wants Toi Foundation to continue to own TSB and is unhappy with the consultation and sale process – consultation is due to close on August 12.
Under the deal, Heartland will pay for TSB in shares, $56 million in subordinated debt and a $264 million two-year vendor loan from Toi Foundation. The nominal price represents 76% of TSB’s book value.
If the Toi Foundation trustees approve the deal, it also requires the approval of Heartland shareholders and a meeting is planned for Sept 30. The deal also requires Reserve Bank approval as prudential regulator and Heartland and Toi Foundation are aiming to settle the deal no earlier than December.
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