Michael Hill eyes tax benefit of up to A$22 mln in ASX shift

Wednesday 8th June 2016

Michael Hill International stands to reap a tax benefit of up to A$22 million as part of a restructure to shift its primary listing to Australia's stock exchange.

The Brisbane-based company will ask shareholders to approve resolutions at a special meeting on June 23 in Auckland to restructure the business so that the parent company will be incorporated in Australia with its primary listing on the ASX. The transaction has received High Court approval and will see the Australian parent acquire all the issued capital through an exchange of shares on a one-for-one basis, keeping the NZX as a secondary listing.

In its report, independent adviser KordaMentha said there was a potential one-off tax benefit to Michael Hill where the tax base of certain assets was reset, forecast to be between A$10 million and A$22 million. Relocating in Australia would align the board, management and business operations in one jurisdiction, allowing shareholder meetings to be held in Australia, earnings and dividends to be declared in the same currency, and attract board members with relevant international experience, the report said.

The scheme wouldn't affect the jewellery chain's dispute with New Zealand's Inland Revenue Department regarding financing arrangements between New Zealand and Australia through 2009 to 2013 when Michael Hill claimed tax deductions of $31 million. If a settlement isn't reached litigation proceedings will continue, the company said.

"Shareholders should experience very little change in the way in which we report to you and your ability to trade in your shares," chair Emma Hill said in a letter to investors. "Shareholders who wish to continue to receive dividends in New Zealand dollars will be able to do so."

International investors who are ineligible to participate in the share swap will be able to sell their holdings through a share sale facility.

The deal has unanimous support from Michael Hill's board.

The NZX-listed shares were unchanged at $1.18 and have gained 19 percent this year.

BusinessDesk.co.nz

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