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Hellaby Holdings stock soars 20% on BBQ sale

Tuesday 1st July 2008

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Shares of Hellaby Holdings soared 20% after the company announced the sale of its BBQ Factory chain and said most of its other business units will lift earnings this year.

Hellaby rose 27 cents to NZ$1.62 today, having halved in value the past 12 months. The company agreed to sell BBQ Factory to a group led by private equity investors Capital Group and two of the chain's managers, it said yesterday.

"The fundamental for the company are starting to look quite promising," said Alan Moore, who helps manage about NZ$230 million at Milford Asset Management in Wellington.

The sale and share price gain may mark a turnaround for the company which posted a full-year loss in 2007, a year in which its former CEO resigned and Hellaby's wrote down the value of BBQ Factory by about NZ$19 million.

The company hired John Williamson as CEO, replacing David Houldsworth. Moore said he was "very impressed" with Williamson's strategy for the company.

Hellaby also withdrew a legal claim against parties involved in the original purchase of BBQ factory, it said yesterday.

"Our businesses have generally been performing very well including, in particular, our subsidiaries in the automotive parts, industrial equipment and packaging divisions, as well as the Hannah's retail shoe business," Williamson said. "They will not only meet or exceed their targets for this year but will also comfortably beat last year's performance."

The company announced it has hired Neil MacCulloch as group general manager for operations, who will assist in strengthening the Hellaby's balance sheet. MacCulloch is a former CFO of Metlifecare.

Costs associated with BBQ Factory would shave about NZ$5 million from the company's pretax earnings. Earnings before interest, tax, depreciation and amortization will be about NZ$40 million, it said.

Hellaby stock gained even as it dropped out of the NZX 50 Index today, replaced by Pike River Coal.

By Jonathan Underhill

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