By Graeme Kennedy
Friday 17th October 2003
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Its prospectus, expected to be launched to the market this week, also details an issue of $2 million in notes.
This would be converted to shares after a proposed AX listing next year.
The company's financial year ends in December and the prospectus indicates that listing was likely early in the new period.
Managing director Steve Allbury owns the group's 6.2 million $1 shares and the planned sale would divest around 35% of the business.
Retailer Eastern HiFi and importers-distributors Avalon Audio and Pacific Audio are owned and managed by the holding company.
Mr Allbury said Eastern HiFi handled quality audiovisual products at the mid-to-high end of the market through six outlets in Auckland, Napier, Tauranga and Rotorua and had sales last year of about $10 million.
Capital raised would be used to open another four stores in the next 18 months, franchise outlets and form a finance company for consumers' retail purchases.
"I started Pacific Audio in 1988 and bought Avalon in 1997 both import and distribute similar but separate high-end brands for the same target markets.
"I wanted to be able to control where those brands appeared," Mr Allbury said.
"They need to be in outlets with certain service levels and product knowledge. With no controls where they go our own retail business would be impaired.
"The broad-based stores do an excellent job for the markets they are in but we have the expertise in this high-end area.
"Eastern HiFi is the biggest retailer of our special brands, which include Denon, Arcan, Loewe, Bose and Epson, but we do sell to other specialist outlets as well.
"With the expansion we expect to take group turnover to $30 million."
Mr Allbury began his home entertainment career in 1974 as an electronic service technician.
He worked from the back of his car repairing stereos and televisions, under the brand Sound & Sight Electronics, in Auckland's eastern suburbs.
"I must have done a reasonable job because people came back to me," he said.
"I had done an electronics apprenticeship and played bass in a heavy metal band so I had a good understanding of the product.
"After three years I opened my first retail store in Howick [Auckland] and wanted to call it Sound & Sight but when it came time to form a limited liability company I found someone else had Sight & Sound, so I called mine Eastern HiFi.
"I went to a bank to open a business account and they asked if I had an accountant. I asked what an accountant was and they directed me to this new bloke who'd just started around the corner.
"That's when I first met Paul Forsyth and we've been together ever since as directors of the company."
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