Hellaby Holdings to Acquire 85% Stake in Contract Resources

NZX / MEDIA RELEASE: 24 DECEMBER 2012

Hellaby Holdings to Acquire 85% Stake in Contract Resources Holdings Limited

Investment company Hellaby Holdings Limited (“Hellaby”) today announced that it has conditionally agreed to acquire an 85% majority shareholding in the specialised industrial services company Contract Resources Holdings Limited (“Contract Resources”).

The acquisition places an enterprise value (debt plus equity) on Contract Resources of NZ$116 million. Hellaby’s 85% shareholding equates to a purchase price of approximately NZ$73 million, exclusive of an estimated NZ$30m debt that it is proposed be included in the acquisition vehicle, subject to purchase price adjustments included in the Share Sale Agreement.

Hellaby is co-investing with three existing Contract Resources management shareholders: being Chief Executive Andrew Wells and two other senior executives, Trevor Penny and Gray Gardner, each with a 5% shareholding.

Hellaby Managing Director John Williamson said he was delighted with the acquisition, which follows more than a year of intensive work by the Hellaby team examining investment opportunities to enhance the existing Hellaby portfolio.

Mr Williamson said “As Hellaby reshapes its portfolio, a key strategic ambition is to acquire, fund and grow internationally-successful New Zealand businesses.

Contract Resources is a New Zealand success story. With around 90% of revenues generated offshore, it offers the portfolio and geographic diversification we have been seeking. The company is heavily exposed to the oil and gas sectors which Hellaby has identified as strategically attractive, and it offers unique intellectual property.”

Hellaby Chairman John Maasland said “We are proud Hellaby is facilitating continued New Zealand ownership of this great business and we are very encouraged that three existing management shareholders have chosen to co-invest with us for the next expansion phase of the company.”

The sellers of Contract Resources are Wellington-based investment firm Rangatira Limited (50%) and a group of existing and former management shareholders. The purchase is conditional on confirmatory due diligence and the finalisation of funding within the acquisition vehicle.

Mr Williamson said Hellaby would fund the equity component of the acquisition through existing banking facilities. Settlement is scheduled to occur on 31 March 2013, with the material conditions satisfied as soon as practicable between January and March.

Mr Williamson said Contract Resources is expected to quickly have a positive impact on Hellaby’s earnings.

“Contract Resources is a well-managed business which has experienced strong revenue and profit growth in recent years, with further opportunities for significant international expansion.

For the 12 months to 31 March 2014, it is forecast to achieve revenues of around NZ$150 million and EBITDA greater than NZ$20 million. In the year to 30 June 2012, Hellaby generated revenues of NZ$498 million and EBITDA of NZ$37 million.
While one-off transaction 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.”

About Contract Resources:

Founded in New Zealand, Contract Resources is an international specialised industrial services company, the operations of which are split into two key service areas:

• Providing specialised niche services to oil refineries, gas processing (LNG) and petrochemical plants through catalyst handling and specialised mechanical services (“Catalyst Handling and Mechanical Services”), and

• A broad range of environmental and industrial services including tank maintenance and environmental services, hydro-jetting and heat exchanger services, pipeline services, offshore exploration and production services, decontamination and chemical cleaning services, and industrial coatings (“Environmental and Industrial Services”).

The business operates internationally, providing services in Australia (its largest market), New Zealand, the USA, the Middle East, Asia and South America.

The company has a blue chip client base that includes a large number of multi-national oil and gas companies, reflecting Contract Resources’ reputation in the oil and gas sector for providing its clients a superior technical service through highly qualified and trained staff, advanced technology and a strict adherence to quality and safety. The ability to offer an integrated range of specialised industrial services and a multi-skilled workforce sets Contract Resources apart from its competitors.

More information is available on the company’s website www.contractresources.com.
ENDS

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