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Freightways float delivers the goods

By Duncan Bridgeman

Friday 3rd October 2003

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Stock exchange chief executive Mark Weldon could afford to raise a smile this week when courier company Freightways listed at a 9% premium to its offer price.

The float, just the third on the NZX this year, raised $141.5 million from the 10.9 million shares on offer, hitting the board at $1.75 ­ 15c above the issue price.

"Did anyone have a sweepstake on what was going to happen?" Mr Weldon asked an upbeat group of brokers and Freightways directors at a listing briefing in Auckland on Monday.

"Management didn't," Freightways chief executive Dean Bracewell was quick to respond.

But investors who had managed to pick up the sought-after scrip had bet well. At press time yesterday the shares had last traded at $1.81.

While there had been suggestions the courier firm might have benefited from the success of Promina and Postie Plus, which both listed at healthy premiums, this latest float had long been anticipated.

Freightways had brought with it an impressive track record and with capital expenditure of only $4-5 million a year looked to have a favourable earnings outlook.

The issue price of $1.60 a share looked set to give a gross dividend yield of 10.5% for the coming year or $14 million, which Mr Bracewell said would exceed net earnings of $12.7 million.

The company prospectus forecasts revenue to better $200 million next year with ebitda settling at $36.2 million.

Mr Bracewell said he was heartened by the support of institutions, particularly in Australia, after critics had labelled the company as highly geared and suspect to unsustainable dividends. "I'm happy with the Freightways shareholder mix going forward."

Major shareholder ABN Amro Capital retained a 19.9% stake in the company but sold nearly 70% in the float.

Demand for the stock was more than three times the supply of shares, with Freightways listing in the sharemarket's top 50 companies by market capitalisation.

After the float, retail investors owned about 55% of Freightways, institutions just over 18%, vendor ABN Amro Capital 19% and Freightways management and advisers to ABN Amro Capital 8%.

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