Friday 27th October 2017
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Bethunes Investments shares almost doubled after signing up New Plymouth-based freight and logistics group Transport Investments Ltd to a reverse listing in a deal valuing the group at $200 million.
NZX-listed Bethunes started work on the transaction after an earlier candidate for a reverse listing pulled out, and today entered into an agreement with TIL after just three months, chair Chris Swasbrook told BusinessDesk. Bethunes had planned a reverse listing with Westgate Power Centre-subsidiary NZ Retail Property Group, however, that fell through when the real estate investor decided it wasn't a good time to raise capital, and the TIL deal emerged, he said.
"It's a great way for TIL to come to market and cost-effective for the wider capital market," Swasbrook said. "We're bringing more credibility to the process that's been around."
Bethunes shares jumped 0.9 cents, or 90 percent, to 1.9 cent, valuing the company at $2.2 million. The shares were halted before today's announcement and last traded at 1 cent.
The reverse listing will see Bethunes issue 73.3 million shares at $1.50 apiece, roughly $110 million in total, with the rest paid in cash, which will be covered by a new $100 million funding line with ASB Bank. Bethunes will consolidate its shares on a 254.19-for-one basis, restating the share price to $2.54 before the acquisition and also plans to raise at least $8.65 million selling shares at $1.50 to wholesale investors in a private placement around the time the deal's completed.
The deal is subject to shareholder approval from both companies, with TIL to hold a meeting in early November and Bethunes in late November/early December. If it goes ahead, Bethunes investors will own about 0.6 percent of the transport group, which will change its name to TIL Logistics Group and replace the board.
"The directors of Bethunes have for some time been looking for a high-quality investment opportunity to present to shareholders," Swasbrook said in a statement. "Our criteria has been a business which is well established with strong and sustainable cashflows, considerable growth opportunities and one which will provide long-term value for shareholders. Transport Investments Limited meets all these requirements."
Swasbrook said the reverse listing also gave TIL the opportunity to show investors they were a solid company "before taking money off people" if they want to access the capital markets.
TIL is one of the country's biggest transport firms operating in 53 locations and employing 1,600 people. Earlier this year it acquired logistics firm NZL Group to beef up its North Island operations. TIL generated more than $320 million of pro-forma revenue in the year ended June 30, it said today.
"TIL has been evaluating a public listing for some time. When the opportunity arose to participate in a reverse listing through BIL we decided this would provide existing TIL shareholders with a commercially sensible, viable and timely path to the NZX," chair Jim Ramsay said. "We are pleased with the arrangements agreed and look forward to bringing TIL to the public domain with the support of over 300 existing BIL shareholders."
The deal is expected to be wrapped up by Christmas, although the parties have until March 31, 2018 to complete it.
Craigs Investment Partners' Mark Lister said the transport sector was a "really interesting space" that had delivered some "pretty good performers", name-checking Freightways and Mainfreight. The announcement comes a day after logistics firm Fliways Group announced plans to de-list after signing a scheme implementation agreement with Singaporean logistics firm Yang Kee Logistics in a $55.4 million takeover.
Bethunes will continue to pursue its current investment and acquisition strategy as a separate company with an in-specie distribution to shareholders giving them an equal stake in a different entity, which will also receive a cash contribution from Bethunes towards its costs.
"It is the intention of the Bethunes directors that New BIL will utilise this cash to apply to compliance list on the NZX main board market and pursue a capital raising initiative in 2018 to fund its investment and acquisition strategies," the company said.
Swasbrook said he expects to raise new capital in the first quarter of next year for the New BIL entity.
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