Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Hellaby finally finds acquisition in Contract Resources

Hellaby finally finds acquisition in Contract Resources

By Paul McBeth

Dec. 27 (BusinessDesk) - Hellaby Holdings, the diversified investment group, has finally found something to buy after being on the prowl for the past two years in specialised engineering maintenance and industrial cleaning company Contract Resources.

The Auckland-based investment firm will spend $73 million on an 85 percent stake in Contract Resources, and saddle it with $30 million in debt, it said in a statement today. The other 15 percent will be held in equal tranches by chief executive Andrew Wells and senior managers Trevor Penny and Gray Gardner. The deal puts an enterprise value of $116 million on Contract Resources.

"With around 90 percent of revenues generated offshore, it offers the portfolio and geographic diversification we have been seeking," Hellaby managing director John Williamson said. "The company is heavily exposed to the oil and gas sectors which Hellaby has identified as strategically attractive."

Hellaby has been seeking a new acquisition since the latter half of 2010 after it strengthened its balance sheet faster than expected in the wake of the global financial crisis and has been keen on finding an investment with an international earnings stream.

Contract Resources is expected to generate sales of $150 million in the year ending March 31, 2014, with earnings before interest, tax, depreciation and amortisation of more than $20 million. The business operates internationally, with Australia its biggest market, and counts Caltex, Shell, Exxon Mobil and NZ Refining Co among its customers.

"While one-off acquisition costs are likely to offset the first three months earnings attributable to Hellaby, the acquisition will be earnings per share accretive for the Hellaby financial year to 30 June, 2014," Williamson said.

Hellaby boosted annual profit 26 percent to $19.3 million this financial year on sales of $497.7 million from its existing portfolio which is made up of shoe retailing, Elldex packaging, wholesale equipment distribution and autoparts units.

The company will fund its equity component of the acquisition through existing banking facilities, and the deal is scheduled to settle on March 31 next year.

Shares in Hellaby rose 1.3 percent to $3.05 in trading on Monday, and have climbed 27 percent this year. The stock is rated an average 'hold' according to three analyst recommendations compiled by Reuters, with a median target price of $3.26.

Wellington-based investment firm Rangatira was one of the sellers with a 50 percent stake in Contract Resources and will realise just over $50 million from the deal.

Last month, Rangatira said the timing of Contract Resources' meant earnings jumped around and led to a fall in its first-half earnings.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Shocking Dairy Footage: MPI Failing Our Animals And Damaging Our Reputation

Greens “Nathan Guy needs to urgently look into how his ministry is enforcing animal welfare standards, how these appalling incidents happened under its watch and what it’s going to do prevent similar incidents happening again in the future." More>>


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news