New Image chairman buys Huljich stake, increasing majority control
BUSINESSDESK: New Image Group's chairman Graeme Clegg is buying the 10.1% stake in the company held by HWM (NZ), formerly known as Huljich Wealth Management, in two steps to avoid having to make a full takeover of the colostrum-based health tonic maker.
The purchase, disclosed in a substantial shareholder notice, comes after the company reported first quarter earnings this week which propelled its share price higher.
Mr Clegg, who already held 58.33% of the company, is paying $6.1 million, or 26 cents a share, in two equal tranches. The first $3.05 million payment will be completed on November 5 this year, with the second tranche to be completed on November 6, 2013.
He is buying 5% now to stay within creep provisions for majority shareholders and 5% a year later.
The Takeovers Panel is looking at the purchase, chief executive Margaret Bearsley says.
New Image's shares rose 20% to 30 cents in trading today, valuing the company at $70.5 million. That added to the 50% surge yesterday after the company said it expects annual sales to beat $100 million.
The Auckland-based company turned a pre-tax profit of $3 million in three months ended September 30, compared to a loss of $1 million a year earlier.
Mr Clegg told BusinessDesk he has confidence in the future of the business. "I don't think there's been enough analytical work done on the prospects of the business."
Fisher Funds bought Huljich Wealth Management's KiwiSaver business in 2011 but did not want property assets and a stake held in NZX-listed New Image Group.
New Image made an annual loss of $6.1 million on sales of $74.7 million in the year ended June 30, which included a $2.3 million impairment charge on its Living Nature skincare brand and its sleep-enhancing milk powder, Sleep Time.
The company's failed relationship with Natural Dairy also resulted in a $1 million inventory charge, while the wind-up of the company's executive share scheme had a one-off cost of $600,000.