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Mainfreight in EUR110m Dutch deal

Monday 7th March 2011

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Mainfreight has agreed to by Netherlands-based transport and logistics firm Wim Bosman Group for an initial purchase price of 110 million euro (NZ$209 million).

A further earn out payment of up to 10 million euro would be payable if the Wim Bosman Group achieved earnings before interest, tax, depreciation and amortisation (ebitda) of at least 20 million euro for the year to December 31, 2011. That would give a maximum purchase price of 120 million euro, Mainfreight said today.

Ebitda for the Wim Bosman Group for the year ended December 2010 was 19.4 million euro, on sales revenues of about 240 million euro.

The deal would be funded by bank debt, and as well as raising the additional debt needed to fund the acquisition, Mainfreight said it had refinanced its existing bank debt facilities on more favourable terms by entering into new loan facilities.

Those were five-year multi currency facilities which allowed for borrowings up to about $415 million, based on current exchange rates.

Mainfreight said it had chosen to debt fund the acquisition in preference to an equity raising due to significant balance sheet capacity and the lower cost of debt relative to the cost of equity.

Following the acquisition, Mainfreight's gearing ratio of net debt to net debt plus equity was expected to be about 48%. The current gearing ratio pre-acquisition was about 17.5%.

Cash flow generation from the combined entity, post-acquisition, would be more than sufficient to service interest costs and debt reduction, Mainfreight said.

It expected the transaction would be accretive to its earnings per share.

The new funding arrangements would allow for expansion under more favourable terms and covenants, with additional headroom for future capital requirements.

Key benefits of the deal to Mainfreight included the establishment of a significant footprint within Europe with a well established, quality business, producing sound profits.

The timing of the deal was favourable to its long term European strategic initiatives, Mainfreight said.

The Wim Bosman Group provided opportunities to expand its international global network enhancing European capability for its customers.

The Wim Bosman Group was one of the largest privately-owned, integrated transport and logistics providers in the Netherlands and Belgium with 14 branches across six European countries, with more than 1000 transport units, and more than 275,000m of warehouse and cross docking facilities, Mainfreight said.

Among conditions to be met for the deal to go ahead, Mainfreight shareholder approval was needed by special resolution, with a special meeting of the shareholders due on March 24. Completion was due on April 1.



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