Hirequip Acquires Power Hire

News Release 19 May 2004

Hirequip Acquires Specialist Generator Hire Company Power Hire

Listed hire company Hirequip today announced it has bought the assets and business of Power Hire Limited for $11.3 million. The acquisition will be settled by way of $5.8 million in cash with the balance through the issue of 5.79 million Hirequip shares at 95 cents per share. The exchange terms were established earlier in negotiations when the Hirequip share price was 99 – 100 cents per share. Settlement will take place on 31 May 2004.

Hirequip’s Executive Chairman Graeme Wong said, “Power Hire is a very good fit with Hirequip. It is the leading company in the electricity generator hire and sales market, being able to supply the full range of generators from 5 KVa to 1,800 KVa. This acquisition marries the specialist skills of Power Hire, particularly in the large generator market, with the New Zealand-wide branch network and financial strength of Hirequip.

“We have previously signalled our intention to grow the business through the acquisition of other equipment hire companies and the development of related business activities. In December last year we bought North Island hire company Ready Hire and Christchurch general hire business Hamill Hire, which increased the company’s hire business revenues by over 30 per cent.

“The acquisition of Power Hire will add further $6.5 million revenue to our business giving Hirequip a revenue stream from equipment hire in excess of $70 million on an annualised basis. The acquisition will be funded from cash flow.

“Power Hire was attractive not only for its growth potential but also for earnings that are unrelated to the construction cycle and so provides a measure of diversification,” Graeme Wong said.

Hirequip already operates in the generator hire market providing generators up to 550 KVa and the combined business, following this acquisition, will increase Hirequip’s hire revenue in this sector by some 250% making Hirequip the leading electricity generator hire company by a considerable margin.

Stuart McKinlay, Managing Director of Hirequip Limited said, “The combined skills of both organisations will provide new business opportunities.”

Power Hire is being purchased from the family interests of Mr. Michael Jacomb who established the business in 1975 at Upper Hutt. In 1988 a branch opened in Auckland and the business now has branches in Christchurch and Dunedin as well.

Power Hire owns the largest generator hire fleet in New Zealand with some 120 sets above 20 KVa. These modern generators come with options such as acoustic canopies, exhaust silencing, and automatic mains failure and mains synchronising control systems.

Customers come from a wide range of industries including shipping, power companies, and hospitals, mining companies, telecommunications and Government.
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Power Hire is the sole NZ agent for the FG Wilson range of generators. FG Wilson is one of the largest generator set manufacturers in the world.

Michael Jacomb will continue as a consultant to the Company. Mr. Jacomb said he intends to hold his shares in Hirequip as a long-term investment. Graeme Wong said, “The Directors of Hirequip welcome Mike to the Company as a new and significant shareholder.”

Hirequip sees the fundamentals of the power hire sector as being very attractive. Users are now very aware of the likelihood of tight supply as gas reserves diminish, large-scale hydro projects have been abandoned, and hydro storage levels vary dramatically from season to season. Major users and critical services all need back-up and/or standby generation capacity and Power Hire is ideally placed as the leading player selling, hiring and servicing generators in this market.

This capability was demonstrated recently when it hired two generators to supply the town of Woodville whilst the system was shut down to effect repairs and maintenance arising from recent flood damage.

”Mr. McKinlay said, “Power Hire will continue to run as a specialist generator solution provider. Employment has been offered to all Power Hire employees on substantially the same terms and conditions that they currently have. I am hopeful that all employees will opt to accept employment.”

Mr. Wong said, “We have been actively seeking opportunities to make further hire equipment business investments and Power Hire provided an excellent opportunity to grow and complement our business.”

“Looking ahead, we have a number of growth initiatives under investigation which are allied to Hirequip’s core competencies. Further growth will come from our existing hire company, branch expansion, and the acquisition of other equipment hire providers where we are satisfied as to the business case for adding value.”

ENDS

BACKGROUND

Hirequip is New Zealand’s only nationwide general and specialist equipment hire company, and currently operates from 48 locations throughout the country.

It was established in Dunedin in the late 1960s, and from there expanded throughout the South Island.

In September 2000, Hirequip acquired Projex, which itself had been operating in the North Island since the 1950s. With that acquisition, Hirequip became the country’s largest hire company at around twice the size of its nearest competitor.

In December 2003 it bought North Island hire equipment company Ready Hire and Christchurch general hire company Hamill Hire.

Revenue from its operating businesses, post the Power Hire acquisition will exceed $70 million on an annualised basis.

Issued by Sorensen Group on behalf of Hirequip New Zealand Limited

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