Shareholders overwhelmingly vote for David Jones [31/7]

Media Statement

31 July 2015

Kirkcaldies’ shareholders overwhelmingly vote for David Jones

Kirkcaldie & Stains’ shareholders today overwhelmingly voted to sell the Kirkcaldies brand and assign the store lease to David Jones.

“Today’s decision by shareholders at a special meeting will bring to a close the 152 year old much-loved Kirkcaldie & Stains store on Lambton Quay and end Kirkcaldies as we know it today,” said Chairman Falcon Clouston.

“While it is a sad day to see the end of a great store, it is also a positive day for Wellingtonians and many New Zealanders from outside the region who from the middle of next year will enjoy a David Jones shopping experience in Wellington.

It will also be positive for a number of our loyal staff who will have the opportunity to receive offers of employment from David Jones. Shareholders will benefit from the payment of the capital that will be released as a result of the sale.

“The decision today is an important step and there is still a lot of work to do. We will gradually sell down our stock from now until the end of January when the Kirkcaldies’ doorman will close the doors of the Lambton Quay store for the final time.

We will also be working hard with David Jones and with our staff to ensure that as many as possible of our loyal employees will be offered new employment.

“The retailing environment has changed dramatically over the past decade. It is the Board’s view, now supported by shareholders, that a single large format store such as Kirkcaldie & Stains lacks the buying power and scale to compete with the new multi store regional and global operators.

These operators have the ability to create their own brands, extract competitive pricing from suppliers, and establish platforms for on-line offerings, which a single store such as Kirkcaldie & Stains has not been able to cost-effectively do.

“A sure sign of how tough it has been is that our retail operations have sustained trading losses for each of the past seven years. Within our resources, we have tried to develop an online direct channel to compete. But our efforts have not succeeded.

“We were successful with the sale of the Harbour City Centre and we have received substantial funds. However the Board’s view is that it could not justify investing a large portion of these proceeds in the retail business when we are faced with these greater competitive pressures from multi-store operators.

Our view is that any such investment would place too great a strain on the Company’s reserves and would provide no guarantee of an acceptable return to shareholders.

“We did consider a second option which was to narrow our retail offering. Again, in this new retail environment of multi-store operators with strong on-line direct channels and the ability to amortise costs across multiple sites, we again concluded that success would not be assured.

“The Board therefore believed and recommended to shareholders that the best option available to preserve value for shareholders is to divest the retail business and return funds to shareholders.

“However, in approaching the option of divestment of the Company’s retail business and maximising funds to return to shareholders, we had a number of priorities. We needed a third party which could take an assignment of the Lambton Quay store lease, continue to serve our loyal customers, and be willing and able to offer on-going employment to as many as possible of our loyal and excellent staff. Finally, we wanted a company that would be a fitting successor to the role that Kirkcaldie & Stains has played in the life of Wellington and indeed, in New Zealand.

“In David Jones we believe we have found an excellent counterparty which today was approved by shareholders.

“The Company’s main objective now is selling our retail stock in an efficient and value enhancing manner. We will also actively develop our plans to distribute to shareholders an amount of cash equivalent to its Available Subscribed Capital of $19.354 million.

The specific resolutions that were passed are:

Resolution 1 (ordinary resolution)

“That the shareholders approve, for the purposes of and to the extent required by Listing Rule 9.1.1(a) and the Agreement, the assignment of the Store Lease and the sale of certain assets pursuant to the Agreement. Capitalised terms are defined in the Explanatory Notes to the Notice of Special Meeting dated 14 July 2015.”

Resolution 2 (special resolution)

“That the shareholders approve, for the purposes of and to the extent required by Listing Rules 7.6.5 and 9.1.1(b) and section 129 of the Companies Act 1993, one or more distributions from the cash reserves of the Company, the aggregate of which does not exceed the Available Subscribed Capital of the Company. Such distribution may be effected (as the Board of the Company sees fit) either by way of pro rata share buyback offer made to all shareholders or by way of a Court approved scheme of arrangement pursuant to the Companies Act 1993 under which shares of shareholders (in an amount and for a consideration determined by the Board) are redeemed and cancelled on a pro rata basis as amongst all shareholders.”

“The Agreement is still conditional to David Jones obtaining Overseas Investment Office (‘OIO’ consent by 30 November 2015. The Board believes it is highly likely that the sale will be consented by the OIO and that the Agreement will, at that point, become unconditional,” concluded Chairman Falcon Clouston.

Issued by the Board of Kirkcaldie & Stains Ltd.

ENDS

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