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Sale of two Legacy Assets for $24 Million

Hirequip Announces the Sale of two Legacy Assets for $24 Million

Listed hire company Hirequip today announced that it has sold two of its legacy assets. These assets, acquired when it was investment company Southern Capital, are a $20m receivable on the Pegasus Bay Town development and 14.6m shares representing a 21.75 percent holding in Tasman Farms.

Hirequip’s chairman Graeme Wong said, “We have been working on optimising the value of the company’s legacy assets for sometime in readiness for sale. The realisation for both sales is in line with our expectation and represents a good exit price for these investments.”

Tasman Farms share last traded at 62 cents per share (¢ps). The weighted average price of the transaction was 65.9 ¢ps. This asset was stated in the books at 46.8 ¢ps realising a profit of $2.80m on disposal. The Pegasus Bay receivable netted Hirequip $14.0m and had a carrying value of nil, yielding a profit of $14.0m.

The Tasman Farms holding was sold to clients of Forsyth Barr; the sale is unconditional and effective immediately. Settlement will be on 1 November 2006.

The Pegasus receivable is being redeemed early by the developer and so Hirequip will not need to wait until sections are sold and settled before receiving its money. Hence the price is $14.0m rather than the $20.0m that would ultimately be received over the next few years.

Mr Wong said, “The $14.0m price achieved approximates the present value assessed by Hirequip.”

Shareholder approval is not required for either sale.

Background

Hirequip, the country’s largest equipment hire company, became a publicly listed company in May 2003 when listed investment company Southern Capital Limited acquired the remaining 50% of the Hirequip business and renamed itself Hirequip.

The hire company was founded in Dunedin in 1954, operates from 55 branches nationwide and employs over 500 staff. It has the largest inventory of general hire equipment available in New Zealand and in addition to machinery hire, operates a substantial Party and Events division in the South Island, and the specialist generator supplier Power Hire.

Rob McGregor
Sorensen Group

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