Friday 15th April 2011 1 Comment
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A bidder for control of New Zealand's largest campervan and tourism attraction operator will probably have to pay up to get control, fund managers say.
Ballylinch LP today launched a partial takeover of Tourism Holdings Ltd (THL) at 67.5 cents a share, conditional on getting more than 50% of the company. It already owns 19.4%.
Brokers said the bid is below asset backing but the company had under performed.
Institutional investors such as ACC, with a 7.2% stake, and Tower Investments, with just under 5 percent, are key to the outcome of this corporate play.
The market is indicating it expects more money to be placed on the table as the company's share price rose above the bid price to 71 cents in afternoon trading.
"We certainly would not be selling at this price," said Richard Stubbs, head of equities at Tower Investments. The net tangible assets were $1.33 a share and they were quite liquid, being campervans with a conservative book value, he said.
"It is a strange bid. It is well below what you would expect them to be able to achieve. It is a small premium to last month's share price but is a significant discount to a three-month or six-month period."
The company is advising shareholders not to sell and to wait for an independent report and target statement.
THL is the largest provider of holiday rental vehicles in Australia and New Zealand under the Maui, Britz, Backpacker and Explore More Brands. It also operates Kiwi Experience and the Discover Waitomo group.
John Grace is the sole director of Ballylinch, which is owned by Scanhard Trustee Co, which is in turn owned by John Orton and Jonathan Heaphy of Havelock North. Grace is based in Switzerland.
Grace is associated with US-based investment firm Sterling Grace, which owns Trustee Executors in New Zealand. That business was purchased from Tower.
Grace has previously said New Zealand is an attractive market for investment.
He said today that THL had a first-class business infrastructure from which further value could be created.
"I have been a supporter of THL for many years and in these difficult times believe that a company as important as THL in an industry that is as important to New Zealand should have a stable cornerstone shareholder," Grace said.
Ballylinch is seeking to acquire 40.85 percent of the ordinary shares and redeemable shares that it does not own.
THL's share price has ranged between $1 and 55c in the past year.
Smaller shareholders, many of whom may hold uneconomic or small parcels, would have the opportunity to sell their shares at a premium price without incurring brokerage costs.
For the six months to the end of December THL reported a loss of $1.3 million, with revenue down 8% from a year earlier to $84.9 million.
The company also reported a sharp fall in European bookings in January and February, saying it believed natural disasters in Australia, along with the reports about those events, had affected the perception of Australia and this country as travel destinations.
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