Tuesday 27th February 2018
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Veritas Investments is investigating a sale or merger of its profitable Better Bar Co as the NZX-listed firm seeks ways to repay lender ANZ Bank New Zealand.
The Auckland-based company has been granted three lifelines by its lender, which is owed almost $27 million as at Dec. 31, as it sells assets to repay that debt. It exited the unprofitable Nosh supermarkets last year and has a conditional agreement to sell the Mad Butcher franchisor to chief executive Michael Morton, with an independent adviser's report set to be mailed out to shareholders once a date for a special meeting has been set.
The $8 million sale price would generate a $5 million accounting gain and go towards repaying ANZ, however it would be less than a quarter of the $40 million price tag attached when Veritas bought the franchisor business in 2013, of which Morton received $20 million in cash and $20 million in shares.
A successful transaction would leave the Better Bar Co as the firm's remaining unit, and Veritas's directors are assessing a number of options "which may include the sale or merger" of the business, recapitalisation or refinancing of its lending arrangements, or a combination of those options, the company's first-half report said.
Net profit fell to $153,000, or 0.35 cents per share, in the six months ended Dec. 31, from $1.2 million, or 2.78 cents, a year earlier, with $750,000 of restructuring costs and $397,000 of losses on its discontinued Mad Butcher operations weighing on the bottom line.
Better Bar Co lifted earnings before interest, tax, depreciation and amortisation 1.9 percent to $3.1 million on an equivalent increase in revenue to $12.2 million.
The shares last traded at 5 cents, valuing the company at $2.2 million.
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