Veritas secures $27.5m loan from Nomura

AUCKLAND: Japanese investment bank Nomura Holdings will lend Veritas Investments $27.5 million to repay bank debt and fund expansion in the hospitality sector, if Veritas’ shareholders agree.

The food and beverage investor has been operating under the close watch of ANZ Bank New Zealand, which has effectively overseen a winddown of the business to claw back as much as possible of the $22.5 million it is owed, and has extended the tranches of the company’s debt four times since October 2017.

In a release to the stock exchange yesterday, Veritas said it had entered into conditional agreements with Pacific Dawn, a wholly owned subsidiary of Nomura Asia Holding NV, for $27.5 million in credit facilities. Tokyobased Nomura is the financial services group that in 2011 bought the socalled ‘‘good bank’’ assets of failed lender South Canterbury Finance.

The first two tranches of funding, totalling $22.5 million, would be used to refinance the ANZ debt in full and the remaining $5 million would be ‘‘available to fund capital expenditure that is approved by Nomura to provide future growth’’, Veritas said. The refinancing would allow the Veritas group ‘‘to focus on a core business area, beverage and hospitality, where it has identified significant growth opportunities and where it has a strong presence already through the Better Bar Company.

‘‘With the support of Nomura through growth funding, Veritas will look to grow revenue, profitability and scale in a very buoyant commercial sector.’’

Each tranche of debt has a threeyear term with quarterly interest of the bank bill rate plus 6.5% per year. Veritas will pay 2.5% of the total amount of debt on draw down, and will pay an exit fee of either $2.75 million or 2% of the outstanding debt at the time of expiry or repayment, whichever is larger.

Nomura also gets the ability to acquire up to 19.9% of Veritas’ shares for no consideration in the deal, although that option cannot be exercised during the first year and expires three years after it is granted.

The company’s shares last traded at 5c, down from 26c this time a year ago. — BusinessDesk