Hirequip further down path of rationalisation

By M ark Peart

Friday 13th August 2004

Hirequip New Zealand's sale of its Pegasus town development in Canterbury brings the company much closer to a focus on its core equipment hire business.

A subsidiary of Wanaka property developer Bob Robertson's Infinity Investment Group has bought the 338ha development.

Under the terms of sale, $10 million is payable by September 10 and the remaining $20 million will be paid as and when the 1800 lots are sold, at a rate of 25c for every $1 of gross sales (net of GST).

Hirequip New Zealand chairman Graeme Wong said in a statement to NZX the sale of Pegasus substantially completes the transformation of the former Southern Capital into a business focused exclusively on the equipment hire industry through its Hirequip and Powerhire brands.

Hirequip's remaining non-core assets are its 21.7% stake in Tasman Farms, from which the company is keen to continue reaping profits.

Its holdings in the biotechnology sector include 11% of Blis Technologies Ltd through subsidiary Southern Diagnostics.

Blis has begun testing the US market in the first phase of its international rollout of an expellable mouthwash formulation of its Blis K12 Throat guard targeting Americans with chronic bad breath.

Hirequip also has smaller interests in Dunedin-based companies Botry-Zen, PharmaZen and CG Surgical, a legacy of the company's former focal point, Howard Paterson, who died in 2003. Hirequip managing director Stuart McKinlay told the National Business Review the company was not in any hurry to sell its biotechnology stocks but would if "the price was right."

McKinlay said the pace of economic growth was an issue for the company as far as its equipment hire business was concerned.

"Is the economy going to roll on like it has been for the next three or four years or is it only going to be 18 months or two years?

"We'll have a firm balance sheet [as a result of the Pegasus sale] but we won't totally prejudice the opportunity for growth inside the trading service company.

"Because of the way the Pegasus deal is structured it's just $10 million off debt. The balance will contribute toward strengthening the balance sheet."

McKinlay said he doubted the company's shareholders would appreciate it being ultra-conservative by just spending depreciation on the sale of plant and new plant for the coming year.

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