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Scales expected to file for IPO within fortnight

Horticulture and logistics company Scales Corporation confirms it is considering an initial public offering and NZX listing possibly as early as next month.

Scales is currently 84% owned by private equity investor Direct Capital, through its Direct Capital IV and Pohutukawa II funds along with co-investment partners New Zealand Superannuation Fund and ACC.

The balance of the shares are held by senior management team members and some 400 external investors.

The proposed offer will likely comprise the sale of existing shares and the issue of new shares by the company. 

Direct Capital intends to sell down a portion of its current shareholding in Scales, but is looking to retain a cornerstone shareholding, according to a statement issued by the company and its advisors this morning.
Deutsche Craig and First NZ Capital are the joint lead managers for the offer.

A prospectus is expected to be available in mid-June and the company expects the shares to be quoted on the NZX Main Board in late July, the statement said.

Scales lifted profit by 50% in 2013 as rising Asian demand for apples helped mitigate the impact of a stronger kiwi dollar.

Net profit rose to $20.4 million in calendar 2013, from $13.6 million a year earlier.

Sales rose 17 percent to $278 million.

The company’s Mr Apple unit exported 4 million cartons, of which 2.82 million cartons were grown at its own orchards. Scales didn't break down earnings for its horticulture, storage and logistics, and food ingredients units.

Apples made up a third of New Zealand's $1.55 billion in fruit exports in the year ended March 31, with Thailand the biggest destination in Asia with $46 million in annual sales.

Direct Capital and co investors the Superfund and ACC, acquired a 79% stake in Scales for $44 million in 2011 from the late Allan Hubbard's failed finance group, South Canterbury Finance.

More by Duncan Bridgeman

Comments and questions
10

Another great example of what a receiver can get for your business.

$250 million turned into $44 million. What a difference 2/3 years can make. The taxpayer should be suing for incompetence.

Another case of privatising profit to the elite and socialising the losses. Some $200 million of them.

Thats just one of Hubbards businesses, which if handled ethnically and correctly, would have seen no loss to the taxpayer.

Someone is not telling the truth here, and while Hubbards book keeping may not have been great, the management that he employed was quite something else.

Do you know a large shareholder lives but a couple of doors down from you know who!!

Its not the receivers who lost all that money but that kindly old gentleman Aka the wizard of Timaru. Mr Hubbard is the one solely responsible for the NZ taxpayer taking such a big hit. The current court case will prove this.....As a taxpayer I am quite happy that NZ superfund and ACC will benefit from this float.

By how much is the question.

Have you forgotten how much this cost the taxpayer in the first place?

Have you also forgotten the bigger bad loan SCF had was the Auckland Hilton, organised by Ed Sullivan; who coincidently still seems to be a shareholder in Scales.

Is that just an inconvenient truth?

Richard I agree with you they are all to blame - Mr Hubbard was chairman and major shareholder of SCF when the very dodgy Hilton deal was executed by Mr Sullivan. I blame them not the receivers who sold Scales, because they were simply doing what the the goverrnment instructed them to do ie cash up assets quick.

South Canterbury was a shareholder in Scales, alongside 400 others - don't mix up the affairs of its shareholder with the business. I'm sure out of the 10,000 fletcher building shareholders a few have gone bankrupt which has nothing do to with FBU. As long as the company kicks on trucking and performing thats all that matters.

Given Aorangi and HMF were not insolvent as has been proven to be the case (remember it was the managers that transferred OUT the key fraud transaction $60million not Hubbard) and the case of Stat Management against AH unlawful - explain how that had no consequence on devaluing and spreading the assets at fire sale prices ??

And by default you think it is OK to lose the lot with no court order and before any charges and court hearing?? I assume your ok with that? and the spin that ensued

I understand your point, and thanks. However, the various managers and receivers were mandated by the government to quickly realise as much money as possible from the various Hubbard entities. Ultimately that is their job, not to take a view on long term asset values. All Hubbard entites were intertwined and he used cash from all entities to buy and sell as he saw fit. Sure some of his businesses were quite good (eg Scales)and they were dragged in to the net. That is unfortunate but a direct result of Mr Hubbards complicated group structure, and his tendency to move funds around without correct governance. Dont blame the receivers for doing their job blame Mr Hubbard for not doing his.

From what I remember Goldman Sachs ran a public auction for HNZ and Scales and had to accept the highest price and im sure were motivated to get the most they could as they are paid on a % of the sale price. at least the NZ government were ultimately the buyer, sorta in one hand out the other, so me thinks dont fret about the receiver

How can Borland bring an IPO to investors as he was an instrumental in the Hubbard empire and one of hubbards key advisors? He surely can not be investor safe.

The amazing thing in this sorry affair is the almost indecent speed with which government shot 1.7 million of taxpayers' money over to the Hubbard company!
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