No sale recommended in partial Tourism Holdings takeover

Friday 27th May 2011

A committee of Tourism Holdings' independent directors has unanimously recommended shareholders not accept a partial takeover offer from Ballylinch LP.

Ballylinch wants to buy 40.85% of the ordinary and redeemable shares in Tourism Holdings it does not already own at a price of 67.5c per ordinary share. That would take Ballylinch's ownership of the company's ordinary shares to between 50.01% and 52.2%.

The shares were trading at 70c around noon today.

An independent adviser's report, published today, from Simmons Corporate Finance put the underlying value of Tourism Holdings ordinary shares in a range between 97c and $1.27.

That was for all the ordinary shares based on the company's current strategic and operational initiatives, and reflected the value of control.

Simmons noted Tourism Holdings' initiatives did not factor in any allowance for shock events to which the tourism industry was highly susceptible.

Some investors may price in a discount to the assessed values to allow for future shock events, Simmons said.

Ballylinch, which held 19.1% of Tourism Holdings' ordinary shares, was a limited partnership that had been registered in April and whose sole director was John Grace, a New Zealand citizen who lived in Switzerland and was chairman of Sterling Grace Private Equity.

Tourism Holdings owns and operates motorhome, campervan and car rental businesses in this country and Australia, a recreational vehicle rental business in the United States, a motorhome and campervan manufacturing company in New Zealand, as well as tourism activities and a transportation business in New Zealand.

Its target company statement said the offer price was materially below the range determined by Simmons, who had stated there was no compelling reason to accept the offer.

If the offer were successful it would give Ballylinch a controlling ownership stake in Tourism Holdings, but as the offer was partial shareholders may not be able to sell all their shares into it and may not receive a control premium on all their shares.

The offer came at a time when Tourism Holdings' performance had been affected by the global financial crisis, persistently high NZ and Australian currencies and natural disasters that affected global tourism flows, the statement said.

While Grace had been a long-standing and supportive shareholder of Tourism Holdings, the board was unaware of any further specialist experience or expertise that Ballylinch brought to the company.

A range of other parties had been approached to test their interest in making a competing takeover offer, but so far no more expressions of interest or proposals had been received.

NZPA

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