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Hart comes home for final Goodman debt slice

By Nick Stride

Friday 2nd May 2003

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New Zealand's first billionaire, Graeme Hart, is in Auckland today to put the final touch to financing for the $2.7 billion takeover of food giant Goodman Fielder.

Mr Hart will front up at a briefing at Auckland's Stamford Plaza hotel with Burns Philp chief executive Tom Degnan and chief financial officer Allen Hugli to launch a $175 million capital notes issue to public investors.

Since gaining control of Goodman Fielder Burns Philp, in which Mr Hart has a majority shareholding, he has moved quickly to slash costs. Goodman has sold Leiner Davis Gelatin for $A115 million and a 24% stake in boutique baker Brumby's for $A2.5 million.

Four Goodman bakeries have been closed amid press speculation that up to 1100 jobs could go in Australia.

Analysts say Goodman's New Zealand bakeries may also feel the pinch.

First New Zealand Capital is the organising broker and underwriter for the retail notes issue by Burns Philp subsidiary Goodman Finance. Oversubscriptions of up to $75 million will be accepted, which would take the total raised by Burns to $2.8 billion.

Mr Hart has spread financing for the Goodman bid over four capital markets. The food company has raised $A1.3 billion ($1.4 billion) in the Australian bank market in "term A" loans and a further A$100 million in a revolving facility.

The "Term B" tranche was sold to US banks, raising $US375 million ($670 million) and a US private placement raised a further $US210 million.

Mr Hart has raised capital in the New Zealand retail market before with an issue of capital notes to back his acquisition of Dairy Foods.

The issue will tap what seems an almost unquenchable thirst among New Zealand retail investors for corporate debt.

Carpetmaker Feltex is well on the way to raising $60 million in secured bonds and state-owned generator Mighty River Power recently issued $200 million of bonds.

Combining Goodman with Burns Philp has created a $5 billion company that ranks among the world's top-80 food businesses but analysts say its assets are a mixed bag.

Burns has for the time being ruled out the sale of Goodman divisions or of its North American yeast and spices operations.

But many suspect Mr Hart already has plans to rationalise the group and make his next move up the global food companies' chain.

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