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Frucor Beverages Group Ltd Announces Share Float

Media Release

Embargoed until May 19, 12.30pm


Frucor Beverages Group Limited Announces Share Float

Leading designer beverages company Frucor Beverages Group Limited today announced it has lodged a Prospectus to float 62,625,000 of its shares in an international offering and that it expected to list on the NZSE and the Australian Stock Exchange in early June.

Frucor Beverages is a world-class designer beverage company. It is the market leader in energy drinks in Australasia, the market leader in the New Zealand fruit juice and drinks category and is the second largest cold beverages company in New Zealand.

Frucor Beverages Managing Director Mark Cowsill said the company’s strategy is for future growth built on its outstanding record of product innovation, marketing expertise, distribution strength, and its sales and earnings.

“We are focused on growing our highly profitable domestic market, building and acquiring new brands in fast-growing markets in New Zealand and off-shore and actively pursuing further global opportunities through strategic alliances and agency arrangements.

“Frucor Beverages will continue to leverage its growing Australian presence, established through the market bridgehead created by the successful launch of V, through product development and acquisition. We see significant growth prospects in Australia.

“Our expansion strategy will be self-funded by the company’s attractive operating margins, high growth, the limited need for capital investment and increasing cash flows,” said Mr Cowsill.

Frucor Chairman Simon Pillar said the appointment of a strong board and the ongoing close involvement of the management team will ensure that the next stage of the company’s growth will be well managed. As part of its governance policy, the board is looking to align incentives for its executives and certain employees through a well structured incentive programme.

“This is the public’s opportunity to invest in Frucor Beverages and share the vision and vitality of a company driven to conceive and develop new products and new brands, a company with the power of ideas and the passion to deliver,” said Mr Pillar.

In a strong expression of confidence in Frucor Beverages future growth prospects, existing shareholders including interests associated with Pacific Equity Partners Pty Limited have committed to maintaining a significant stake in the company.

“Frucor Beverages has shown outstanding growth over the past four years. Between 1996 and 1999 financial years earnings before interest, taxes, depreciation and amortisation increased by 337 percent from NZ$4.1 million to NZ$17.9 million,” said Mr Cowsill.

“Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast for 2000 financial year to be NZ$31 million, 73 percent higher than for the last financial year.

“EBITDA of NZ$42.5 million is forecast for the 2001 financial year, over seven times that of the 1996 financial year.

“And we’re expecting earnings before tax for 2000, measured on the same basis, to be 73 percent higher than for the last financial year. Clearly, Frucor Beverages is one of the fastest growing cold beverages companies in Australasia and has the opportunity to become a global leader in the energy drinks market.

“It is a company that we believe will be very attractive to investors looking for a stock capable of generating cash flow and growth,” Mr Cowsill said.

A book-building process will set the price per share. The indicative price range has been set at NZ$1.95 per share to NZ$2.25 per share however applicants under the public offer (retail investors) will not pay more than the maximum of the indicative range. The Offer will open on May 22 and the public offer is expected to close at 5.00pm on June 8. The final price is expected to be set on June 11 with conditional trading on the New Zealand and Australian Stock Exchanges beginning on June 13, going unconditional on June 16.

Copies of the Prospectus and Investment Statement are generally available from members of the Stock Exchange and may be downloaded from the Internet at www.frucor.com. Applications can only be made on the form contained in the Investment Statement.

The vendors are offering 50.1 percent of their total shares in Frucor Beverages for sale.
The number of shares offered may be increased to 75 million shares (60 percent of the shares in the company) if the Joint Global Coordinators exercise that option.

About Frucor Beverages

Frucor Beverages is a leading designer beverage company. It is an international company with proven market leadership.

Its diverse and powerful portfolio of brands is concentrated on premium, high growth beverage categories. Products include leading energy drink V, other new age drinks Muse and gforce, fruit juices Fresh-Up and Just Juice – market leaders and New Zealand icons for more than 15 years – and popular brands such as Stefan’s, McCoy, Citrus Tree, NZ Natural, H2GO and Kokomo.

With 25 projects under development, innovation in niche markets is a key element of the company’s business.

Its stellar brand V is now sold in four major markets. Within 12 months of its launch in Australia V captured over 60 percent of the market share in the fast growing energy drinks market. It was also launched in South Africa in October 1999 and into the NZ$1 billion UK energy drinks market in May 2000.

Since November last year Frucor Beverages has been responsible for manufacturing and distributing major brands in the carbonated soft drinks market (the largest category in the New Zealand cold beverages market) including the Pepsi range, 7Up, Mountain Dew and Mirinda. Frucor Beverages now has around 10 percent of this market.

Application has been made to the New Zealand Stock Exchange for permission to list the shares and all the requirements of the Exchange relating thereto that can be complied with on or before the date of the distribution of this advertisement have been duly complied with. However, the Exchange accepts no responsibility for any statement in this advertisement.

For more details of the offer please refer to the Investment Statement and the Prospectus dated May 19 2000. Copies of these documents can be obtained from Credit Suisse First Boston NZ Securities Limited.

ENDS

For further information:
Simon Pillar, Chairman, Frucor Beverages Group Limited
Tel: 00612 9229 1400
Mob: 0061412 404 627

or

Mark Cowsill, Managing Director, Frucor Beverages Group Limited

Tel: +64 9 250 0121
Mob: +64 21 742 421


19 May 2000

Frucor Beverages Group Limited
Initial Public Offer – Key Facts

The following Key Facts paper summarises the main details of Frucor Beverages Group Limited’s offer of 62,625,000 ordinary shares in an international offering. It is for use by journalists and others seeking quick access to background information on the sale. All information herein is consistent with the New Zealand Prospectus and Investment Statement. For more details please consult either an Investment Statement or a Prospectus. Investment decisions should only be made after carefully consulting these documents.

Details of the Offer

Structure of the offer

 62,625,000 shares in Frucor Beverages Group Limited are being offered by interests associated with Pacific Equity Partners Pty Limited and other vendors.

 The shares being offered represent 50.1 percent of the shares of the company.

 A further 9.9 percent of the shares in the company will be offered if the over-subscription option is exercised.

 The offer comprises a public offer and an institutional “book building” exercise:

- a public offer to members of the public in New Zealand and Australia;
- an institutional offer to institutional buyers in New Zealand, Australia and other countries.

 The institutional offer is intended to be underwritten.


Payment and pricing

 Payment for the shares is to be made at the time of application.

 The final price will be set through the institutional book building price.

 The indicative price range is between NZ$1.95 and NZ$2.25 per share. The final price will be set by the vendors in association with the Joint Global Co-ordinators Credit Suisse First Boston NZ Securities Limited and Salomon Smith Barney Australia Securities Pty Limited.

 The indicative price range is only provided as a guide and the final price may be outside this range however New Zealand and Australian applicants under the public offer (retail investor) will not pay more than the maximum of the indicative price range.

Opening and closing dates

 The public offer opens on May 22. Applications for the public offer must be received by the Share Registry by 5pm on June 8. The offer is expected to close at this time.

 The institutional offer opens on May 22. Bids must be received by the share registry by 3pm on June 9.

 It is expected that allocation details will be available from June 13.

 Copies of the Prospectus and Investment Statement are available from members of the New Zealand Stock Exchange, Credit Suisse First Boston NZ Securities Limited and Frucor Beverages website at www.frucor.com.

Applications

 Applications for shares can only be made on the application form contained in the Investment Statement.

 Applications under the public offer must be for a minimum of NZ$2000 and thereafter in multiples of NZ$500.

 Bids under the institutional offer must be for a minimum of 50,000 shares and thereafter in multiples of 10,000 shares.

Details of the Business

Overview and history

 Frucor Beverages was established in 1961 as the commercial juice operation of the New Zealand Apple and Pear Marketing Board. Its original product was Fresh-Up.

 The company was acquired from the board in 1998 by a consortium of investors including the US-based Bain Capital and the Australian-based private equity investment group Pacific Equity Partners.

 Frucor Beverages operates three factories – its main plant is located at Wiri in Auckland, with H2GO produced at Wanganui and NZ Natural at Kaiapoi in the South Island.

 The Wiri plant has eight production lines capable of running 24 hours a day but usually operates 8-16 hours a day, five days a week.

Nature of business

 Frucor Beverages is a world class designer beverage company with a leading position in the New Zealand and Australian markets and a rapidly expanding global presence:

- it is number one in New Zealand’s juice and juice drinks and energy drinks markets;
- it is the second largest cold beverages company in New Zealand ;
- it is number one in the Australian energy drinks’ market;
- It has recently launched its energy drink brand V in South Africa (October 1999) and in the UK market (May 1 2000).

 Frucor Beverages product portfolio is concentrated on brands in the premium, high growth beverage categories. These include leading energy drink V, new age drinks Muse and gforce, fruit juices Fresh-Up and Just Juice – market leaders and New Zealand icons for more than 15 years. Other popular brands include Stefan’s, McCoy, Citrus Tree, NZ Natural, H2GO and Kokomo.

 Since November last year Frucor Beverages has been responsible for manufacturing and distributing major brands in the carbonated soft drinks market (the largest category in the New Zealand cold beverages market), including the Pepsi range, 7Up, Mountain Dew and Mirinda. Frucor Beverages now has around 10 percent market share of this category.

Portfolio in detail

 New Age beverages: Frucor Beverages has become one of the fastest growing cold beverage companies in Australasia by recognising demand for new age designer beverages and responding through producing branded products into this market segment.

- V energy drink was one of New Zealand’s most successful brand launches. Between August 1997 and May 2000 it has secured a 60 percent share of the New Zealand energy drinks market. Gross sales are forecast to rise to more than NZ$30 million in financial year 2001.

- V energy drink has also secured a 60 percent share of the energy drinks market in Australia since its launch in February 1999. Frucor Beverages expects sales for the 2000 financial year to rise by more than 50 percent in 2001.

- V energy drink was also launched into South Africa in October 1999 where it is estimated to be the number two energy drink; it has recently been launched into the UK NZ$1 billion market and will be rolled out into other European markets when appropriate.

 Fruit juice and drinks: Frucor Beverages has a 57 percent share of the fruit juice and drinks category through established products such as Just Juice and Fresh-Up, and new options such as Fresh-Up Spritza (Fresh-Up with sparkling mineral water) and Kokomo (a shelf-stable fruit smoothie).

 Carbonated soft drinks: Frucor Beverages portfolio comprises the Pepsi range, 7Up, Mountain Dew and Mirinda. Frucor Beverages now has around 10 percent of this market and gross sales are forecast to exceed NZ$45 million in the 2001 financial year.

 Bottled water products: such as NZ Natural and H2GO give Frucor Beverages more than 30 percent share of the bottled water market which has almost doubled over the past three years.

 Agency lines: Frucor Beverages also distributes Wave, Lucozade and Ribena.

 New product development: new product development is a priority for Frucor Beverages. As at March 2000 it had 25 new projects (beverages and packaging innovations) under development.

Frucor Beverages Markets

 Frucor Beverages directors believe beverage markets are changing with segments blurring and new categories developing along functional product lines (such as energy drinks).

 This customer-led change expands the size of the addressable market and provides opportunities for companies such as Frucor Beverages represented in these new categories.

 In modern beverage markets, therefore, successful companies will increasingly be designers and manufacturers of branded beverages based on shifting consumer preferences (such as V).

 Frucor Beverages operates in the following broad market segments:

New Zealand cold beverage market: this market has achieved growth since 1997 of 25 percent; estimated total sales are NZ$900 million

- carbonated soft drinks are the largest segment with estimated sales this year of NZ$500 million; Frucor Beverages has an estimated 10 percent of this market

- non-carbonated soft drinks have estimated sales of NZ$400 million; Frucor Beverages has approximately 38 percent share of this category.

Frucor Beverages considers the non-carbonated cold drinks market will generate major growth for its fruit juice and drinks, energy drinks, sports drinks and bottled water brands.

Global energy drinks market: this market has achieved rapid growth over 12 years to sales of NZ$3 billion annually. Given high consumer demand, Frucor Beverages sees significant opportunities for increased sales. This is particularly so in Europe where market potential is currently untapped and consumption could grow several times.

Frucor Beverages Business Strategy

 Key elements:

- Grow a strong New Zealand presence: actively maintain its stable, highly profitable successful New Zealand business based on a strong product portfolio and extensive distribution system;

- Leverage its Australian presence: build on the market bridgehead established in Australia by V by launching other value-added products from the Frucor Beverages portfolio;

- Global expansion: introduce V into international markets following its launch into South Africa and the UK.

Financial Performance

 Since the 1996 financial year Frucor Beverages has achieved significant earnings growth:

- earnings before interest, taxes, depreciation and amortisation increased by 337 percent from NZ$4.1 million to NZ$17.9 million in the 1999 financial year;

- normalised EBITDA is forecast for 2000 financial year to be NZ$31 million, 73 percent higher than for the last financial year;

- EBITDA of NZ$42.5 million is forecast for the 2001 financial year, over seven times that of the 1996 financial year.

Application has been made to the New Zealand Stock Exchange for permission to list the shares and all the requirements of the Exchange relating thereto that can be complied with on or before the date of the distribution of this advertisement have been duly complied with. However, the Exchange accepts no responsibility for any statement in this advertisement.

For more details of the offer please refer to the Investment Statement and the Prospectus dated May 19, 2000. Copies of these documents can be obtained from Credit Suisse First Boston NZ Securities Limited.

ENDS

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