Frontier Acquisition Deemed ‘Fair And Reasonable’
May 12, 2000 - An independent report commissioned by Frontier Petroleum (ASX: FRO) to assess its purchase of Receivables Management Group (RMG) has declared the transaction fair and reasonable.
The report, by Melbourne-based PKF Corporate Advisory Services, was prepared to assess whether the purchase disadvantaged those Frontier shareholders not associated with the vendors of RMG and the other parties to receive shares in the company.
Late last month Frontier announced that it had entered into an agreement to acquire what will be Australasia’s largest receivables management company. Under the agreement, and subject to Frontier shareholder approval, Frontier will acquire the assets and business interests of RMG and a number of associated companies in Australia and New Zealand.
Frontier will pay a total price of $A80 ($NZ96) million satisfied by the issue of approximately 300 million Frontier ordinary shares and $A20 ($NZ24) million in cash. After the acquisition of RMG and the associated companies, and subject to shareholder approval, Frontier will change its name to RMG Limited.
The report released today says statistics and trends in the USA indicate that the receivables management industry will continue to grow rapidly, particularly through greater use of services currently offered and the development of new products.
The report says the proposed transaction presents an opportunity to significantly improve Frontier’s corporate profile by redirecting its operations into the financial services industry, a growing sector of the economy.
“If the Receivables Management Group achieves its growth potential in the medium term, there should be a further increase in (Frontier’s) share price as the market re-rates (Frontier) in line with its competitors,” the report says.
“Our analysis of the fair value of (RMG) indicates that significant premiums have been placed on comparable listed companies, namely Data Advantage and Baycorp. These premiums indicate the potential for gains to (Frontier’s) Non-Associated Shareholders if the proposed transaction is approved. The probability of these gains being realised is dependent upon the Receivables Management Group being successful in providing increased higher margin services.”
Frontier chief executive John Tarrant said the report vindicated the pricing models used to construct the transaction and showed Frontier shareholders were significantly better off as a result of the switch to financial services.
“Frontier is poised to become one of the pre-eminent receivables management groups in Australia and New Zealand with the scale and capabilities that make us a real threat to the existing players.”
After the transaction is completed, the new chief executive will be Mr Paul Cooney, a 30-year veteran of the industry and current national president of the Australian Collectors Association.
Mr Cooney said today the independent report highlighted the opportunities facing the receivables management industry and the position of strength RMG would have after the merger.
“By consolidating a number of participants RMG will not only be Australasia’s largest receivables management company, it will be the first company operating on both sides of the Tasman to offer an integrated range of receivables, debt management and credit reporting services under a single umbrella,” he said.
Clients who have traditionally had to deal with several agencies will now be able to obtain a full range of services from one company. Services will include traditional debt recovery and receivables management, credit information services together with database management, debt purchasing, factoring, ledger management and even complete outsourcing of a company’s receivables function by deploying leading edge internet-enabled technology.
For further information contact
Frontier Petroleum NL
+61 8 9322 9009
email@example.com Paul Cooney
Receivables Management Limited
+61 3 9205 0711
Botica Conroy & Associates
+64 21 400 500
firstname.lastname@example.org Peter Dinham
+61 3 9639 2300