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Metroglass to sell $244.2M of shares in IPO, no new capital

Metroglass to sell $244.2M of shares in IPO, no new capital

By Paul McBeth

July 7 (BusinessDesk) - Metro Performance Glass, which has more than half the New Zealand glass processing market, will raise $244.2 million in an initial public offer, almost all of which will go to its current owners who have spent $40 million since taking control.

The Auckland-based company will sell 143.7 million shares at $1.70 apiece, according to a prospectus lodged with the Companies Office today. Of the money raised, some $230.5 million will buy the Metroglass assets from its private equity owners Crescent Capital and Anchorage Capital and senior management, with the private equity owners keeping a combined stake of 18.5 percent and management retaining 3.8 percent. Some $10.9 million will cover the cost of the offer and $2.8 million will go towards reducing debt. Net debt will be about $50 million upon listing.

Chief executive Neil Rigby told a conference call the private equity owners have invested about $40 million over the past three years, including upgrading its facilities, and anticipate capital expenditure of about $5 million over the next three to five years. Metroglass's current owners took over in 2012 after the company's lenders forced a restructure of the then-heavily leveraged firm in the face of a declining residential construction market in mid-2008.

"The New Zealand value added glass processing market is forecast to grow, driven in particular by the expansion of the residential construction market and the improving commercial construction market," chairman John Goulter said in the prospectus. "Whilst the New Zealand construction market is cyclical by nature, residential construction activity is forecast to exceed historical averages over the medium term, buoyed by economic growth, net migration flows, the stimulus of the Christchurch rebuild and the reversal of the below average level of building activity over the past six years since the global financial crisis."

The price was set in a bookbuild last week, coming in near the bottom of an indicative range between $1.65 and $1.90. Institutional investors have started pushing back against vendors' expectations as a raft of public offers give them broader investment opportunities.

Metroglass expects to lift net profit to $14.3 million in the 12 months ending March 31, 2015 from $12 million in 2014, with annual sales forecast to rise to $171.9 million from $155.4 million. It expects to pay a dividend 3.6 cents per share in the 2015 year, implying a cash yield of 2.1 percent.

The offer is expected to open on July 15 and close on July 28, with an ASX and NZX listing flagged for July 30.

The sale price implies a market value of $314.6 million, and enterprise value, which includes net debt, of $364.6 million upon listing.


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