New Zealand: "Heartland Bank" merger - Chapman Tripp leads legal work
Last Updated: 20 January 2011

Chapman Tripp spearheaded the legal work in merging MARAC Finance, CBS Canterbury and Southern Cross Building Society to form a listed financial services group, which is intended to become New Zealand’s only listed, New Zealand controlled, registered bank. The merger was completed on 7 January 2011, and the shares are expected to be listed on the NZSX by the end of January 2011.

The merger involved amalgamating three businesses with over $2 billion of assets, an IPO of 300 million shares; the transfer of approximately $1.7 billion of debt securities from three different issuers; the transfer of engagements from the merging building societies to the new operating vehicle under the provisions of the Building Societies Act; the conversion of two building societies into companies; and the implementation of a court approved scheme of arrangement.

Chapman Tripp advised on all legal aspects of the merger including devising the transaction structure. As there is no legislation which provides for the merger of a building society and a company, Chapman Tripp sequenced procedures from both the Building Societies Act and the Companies Act to ensure a secure and successful merger. These procedures included converting the building societies into companies, effecting an amalgamation pursuant to a Court order scheme of arrangement and establishing a new building society operating vehicle. This is the first time such a merger has been attempted in New Zealand.

Approvals for the merger were obtained at 11 security holder meetings (including four adjourned meetings) and from the High Court to implement the transaction.

“This merger has been a complex and challenging deal to work on, particularly in light of the need to devise a transaction structure which gave certainty to the parties and achieve a merged entity within the current legislative framework; our team is proud to have played a role in this groundbreaking transaction,” says partner Barry Brown.

The team involved in the merger, headed by partner Barry Brown, comprised partners Tim Tubman, Mark Reese and Adam Ross, principals Cathryn Barber and Chad Morgan and senior solicitor Rachel Dunne.

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