UPDATED: Cereal king Hubbard gets a new shareholder

Thursday 17th December 2009

Rotorua Energy Charitable Trust, which has injected some $75 million into local community projects over the past 15 years, has bought a third of former Auckland mayor Dick Hubbard's cereal business for an undisclosed sum to boost the company's expansion goals.

The deal gives the charitable trust a 35.6% stake in Hubbard Foods Ltd. and Rotorua Trust chief executive Stuart Burns will become a director on the company. Dick Hubbard will remain chairman and he and his wife will keep majority ownership of the company. Burns said they will also add two independent directors to the board.

"We've provided cash to assist the company's growth," Burns told BusinessWire. "The management team has placed significant orders for capital equipment in the next year to meet demand."

Rotorua Trust also has holdings in Rural Equities Ltd., Abano Healthcare Group, and Westpac Banking Group through its wholly-owned subsidiary Perpetual Capital Management. The investment vehicle, chaired by former minister Paul East, has a portfolio worth $121 million, as at Sept. 30, and currently pays an annual $5.7 million to the trust.

The Hubbards deal will give the trust a "good income stream" from a difficult industry to enter, Burns said. He declined to comment on the sale price, though he expects the investment return to be "double digits."

The trust is looking towards private equity investment, and Burns said there are a lot of small- and medium-sized businesses in New Zealand that have compelling cases.

Hubbard Foods has a development programme around new market innovations, energy efficiencies and plant expansions which has the full support of the company's bankers and new shareholder, it said in a statement.

"Hubbards will remain under the current senior management team with no change of direction over the medium term," Hubbard said in a statement. "This new relationship will assist Hubbards achieve some of our ambitious long-term growth goals."

(BusinessWire)

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