PGC's Torchlight sells UK newspaper group for $45 million

Torchlight Fund LP, a subsidiary of financial services firm Pyne Gould Corp [NZX: PGC], has sold its stake in UK newspaper group Local World for about $45 million.

Torchlight's 10.55% stake in the media group has been bought by Trinity Mirror (which is buying out the 80% of the company it doesn't already own), the Guernsey-based, NZX-listed parent said in a statement. Torchlight will receive about £20 million, of which £13.7 million will be in cash, £5 million in Trinity Mirror stock, and £1.3 million held in a cash escrow for two years, pending settlement adjustments.

The company first invested £7.5 million in Local World in December 2012, approximately $15 million at the time, said Pyne Gould managing director and controlling shareholder, George Kerr. Torchlight has since pulled out about £8 million, or $17 million, in dividends.

Kerr said the sale price reflects a premium of 11% to the unaudited carrying value in Torchlight's 2015 accounts.

Yesterday, Pyne Gould chairman Bryan Mogridge quit the board effective immediately "for personal reasons" as the company contends with its second share trading suspension in as many years after failing to lodge its audited annual accounts. Mogridge's departure means the board has just one independent director, breaching NZX listing rules unless it's granted a waiver by the stock market operator.

This is the second year Pyne Gould has been late in filing its annual report, with its shares suspended for almost four weeks last October. The company was later fined and censured by the NZ Markets Disciplinary Tribunal over the delayed annual report, which had been tagged by auditor PwC because of the firm's inability to obtain sufficient information about Pyne Gould's investment in Torchlight Group and Torchlight Fund.

Grant Thornton is Pyne Gould's new auditor, and the handover of the Torchlight accounts were blamed for the slow reporting.

Pyne Gould shares last traded at 24.5c before they were suspended, less than the 33c Mr Kerr and Californian investment fund Baker Street Capital offered when they tried unsuccessfully to take the company private in 2011.

(BusinessDesk)