InterCity Group announces joint venture

InterCity Group announces joint venture with Tourism Holdings Limited

November 22, 2007:  InterCity Group (NZ) Limited and Tourism Holdings Limited (THL) have agreed to form a joint venture to build on the strengths of their nationwide bus and coaching operations and Northland leisure cruising businesses.

The current owners of InterCity Group (NZ) Limited will have a 51 percent shareholding in the joint venture -- InterCity Holdings Limited (ICHL).  THL will receive a 49 percent shareholding in exchange for its Fullers Bay of Islands and Great Sights business units.

The joint venture will bring together the management experience of InterCity Group and its extensive bus and coaching network with THL's Great Sights coaching brand.  It will also consolidate management of the maritime assets of the joint venture partners in Northland, one of New Zealand's fastest growing tourist destinations.  The transactions will take effect on 1 December 2007.

The new company will be headed by current ICG Chief Executive Officer Malcolm Johns.  ICG and THL will each appoint two directors to the board, and there will be an independent chairman.  The board members will be Joe Butterfield (Chairman), Glenn Ritchie (MD, Ritchies Transport Holdings Ltd), Paul Snelgrove (MD, Tranzit Group Ltd), Grant Webster (Chief Operating Officer, THL Leisure Group) and Trevor Hall (Chief Executive, THL).

Commenting on the joint venture, ICG Chief Executive Officer Malcolm Johns said “InterCity Group has grown significantly over the past few years through organic growth and acquisition.  This joint venture creates a superb platform that provides us with additional opportunities to grow and develop our business employing the principles of sustainable development that we have already embraced.  Over the next few months it will be very much business as usual for our customers but it is exciting to look ahead at the long term benefits that will result from the operational synergies and other advantages that this joint venture will provide.”

ICHL will bring together InterCity Coachlines; Newmans Coach Lines; Great Sights New Zealand; Kings Dolphin Cruises and Tours and Fullers Bay of Islands.  In addition to creating a coach network that will provide over 180 daily services across New Zealand the joint venture will have 12 marine vessels. This includes the introduction of InterCity’s new $10 million, fuel-efficient small ship that will start offering overnight cruises around the Bay of Islands from summer 2009.

THL Chief Executive Trevor Hall commented, “The grouping of these well known brands will create one of the largest tourism and transport companies in New Zealand.  InterCity Group is already an industry leader and we look forward to bringing the knowledge we have gained through managing tourism business both in New Zealand and offshore to the table.  This deal will provide InterCity Group with additional capabilities to further strengthen the groups’ transport network and tourism offerings, creating real value for both shareholders and customers.”

The joint venture will also enable ICG to continue to build upon its existing environmental efforts and to integrate new processes taken from the experience gained as part of Fullers Bay of Islands commitment to the Northland Sustainable Tourism Charter. 

Johns estimates that through winter code-sharing between brands and fleet rationalisation, the company will be able to reduce its land transport emissions by approximately 20 percent and its marine vessel emissions by around 30 percent. 

“InterCity Group and Tourism Holdings Limited have been at the forefront of driving environmental responsibility within the New Zealand tourism industry.  This joint venture will enable us to create operational efficiencies that will result in significant reductions to both our carbon footprint and fuel consumption, without affecting the service we provide to both our domestic and international customers” said Johns.  

On completion of the joint venture, InterCity Group’s transport network will offer more than 150,000 daily connections with 180 services stopping at 700 communities, towns and cities across the country. 

Johns concluded “This joint venture will more than double the size of our business and will further strengthen our tourism and transport portfolio throughout New Zealand. In taking a national view of our business, we are also well aware of the regional economic development potential of tourism and in particular we will continue to focus on the Northland region investing in the partnerships we have already developed in the area.  With the addition of the Fullers Bay of Islands and Great Sights brands, we hope to be able to deliver even better results to the tourism industry both in Northland and throughout New Zealand.”

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