Southbury Corporation, which now includes the three major assets owned by South Canterbury businessman Allan Hubbard, has completed its first major capital raising as it moves towards an NZX listing.
Southbury, directly or through subsidiaries, owns 100% of the ordinary shares of South Canterbury Finance and Helicopters (NZ) Ltd and 79.7% of Scales Corporation.
The newly registered company announced yesterday it had completed a private placement of $27.5 million of convertible notes as the first part of a two-stage capital raising process.
The $27.5 million of convertible note funds raised by Southbury have been used to subscribe for new ordinary share capital in South Canterbury Finance.
The placement was arranged by Forsyth Barr with subscriptions from institutional and private investors.
Craigs Investment Partners broker Chris Timms said it appeared that wealthy individuals had been "shoulder tapped" to take up the notes.
"Their exit position will be the notes converting to equity at the IPO (initial public offering).
"I imagine the conversion will be at an appropriate discount to sweeten the deal."
Southbury said in a statement the notes converted into equity in the event of an IPO or were otherwise redeemable for cash.
SCF had provided a guarantee for the redemption of the notes in exchange for an indemnity from Southbury.
SCF and Southbury had been taking steps to prepare for the listing, which was expected in the first half of the year, he said.
Those steps included the recent appointment of independent board members Bill Baylis, Stuart McLauchlan (both from Dunedin) and Denham Shale.
One of those three was likely to be appointed chairman of the listed company.
Other steps were the appointment of corporate restructurer Sandy Maier as chief executive officer, resolution of the outstanding United States noteholder matter, restructuring of the group banking arrangements and the recent confirmation of SCF's BB+ credit rating.
With the inclusion of the three subsidiary companies, Southbury had consolidated total assets of about $2.8 billion and net assets of about $300 million.
Asked what the message to existing SCF shareholders would be from the latest capital raising, Mr Timms said existing shareholders were income holders and he believed the planned listing would have no impact on them.
Southbury would need to attract investors looking for capital gains or growth.
"On that basis, the offer will still have to be reasonably attractive in the current environment to get substantial support from the market," he said.
Mr Hubbard said the formation of Southbury and issue of new notes convertible to equity were major steps in the group's restructuring.
"It means we are well on the way to a totally fresh approach to the future."
At a glance
Southbury Corporation
• South Canterbury Finance: One of New Zealand's largest privately-owned finance companies.
The company offers a diverse range of products to borrowers in the business, plant and equipment, property, rural and consumer sectors.
The company has 14 regional offices throughout New Zealand.
As at September 30, it had 43,000 secured debenture holders and unsecured depositors.
• Helicopters (NZ) Ltd: Founded in Timaru in 1955, the company is internationally recognised.
The majority of revenue from helicopter service operations is derived from term contracts with a broad range of customers including oil, gas and mining companies, public sector, corporate, tourism and long-established companies.
The company has its headquarters in Nelson and has principal maintenance and overhaul workshops in New Plymouth, Perth and Vientiane (Laos).
• Scales Corporation: One of New Zealand's oldest companies having operated continuously since 1912.
Scales consists of a wide range of businesses across the primary sector, including being the largest grower, packer, and exporter of apples in New Zealand.
It has extensive coldstore operations, is one of the country's largest pet food processors, a bulk storage and processing company, a shipping agency and a captive insurance agency.
