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Tourism Holdings lifts operating results forecast

Monday 23rd May 2011

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Tourism Holdings, which is the subject of a partial takeover offer, has upgraded its operating results outlook.

The company today said it now expected operating earnings before interest and tax (ebit) of $4 million for the year to June, compared to its previous breakeven forecast.

It also said its operating net loss after tax was now expected to be $1.4 million, up from the $4 million loss predicted earlier.

But a non-cash charge of about $27 million due to a write down of goodwill would result in a reported net loss after tax of about $28.4 million for the 2011 financial year.

For the 2012 financial year ebit was forecast at $17 million, with a net profit after tax of $6 million.

Key factors in the 2011 outlook included an improvement in vehicle sales volumes and margins in the United States, compared to earlier expectations.

The New Zealand rentals business had improved due mainly to the use of motor homes after the Christchurch earthquake in February, while costs had improved.

The 2012 forecast took into account factors such as the positive net impact of the Rugby World Cup, a full year contribution from RV rental and motorhome sales company Road Bear in the US, removal of acquisition costs associated with the purchase of Road Bear, and a cut in fleet-related costs in Australia.

Countering the gains, rental demand in Australia for the first half of the 2012 financial year was expected to be lower than a year earlier due to the high level of the Australian dollar.

Tourism Holdings said it had also entered a conditional agreement to buy the Ci Munro facility in Hamilton for about $7.3 million.

Tourism Holdings' independent directors reiterated a do not sell recommendation in response to the partial takeover offer before an independent adviser's report and target company statement were released. The documents were expected to be posted by next Monday.

Ballylinch LP, which already has 19.14% of the ordinary shares in Tourism Holdings, is seeking to buy 40.85% of the ordinary shares and redeemable shares it does not already hold.

That would amount to 33.03% of all Tourism Holdings' shares and 40.85% of the redeemable shares.

Ballylinch is offering 67.5c for each ordinary share. The share price was unchanged at 72c in early trading today.



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