Gresham denies Noel Leeming sale talk

Electronics retailer Noel Leeming has “plenty of runway” left and is not for sale any time soon, according to majority-owner Gresham Private Equity.

Fairfax Media reported this morning that investment bank Macquarie had been appointed to advise shareholders on future options, with speculation the business was already on the sale block.

Gresham bought Noel Leeming from Eric Watson’s former Pacific Retail Group in 2004 for $138 million. Local investor Direct Capital also holds a small stake in the business.

Rumours circulating late last week suggested Noel Leeming’s bankers were keen on getting their money back and were exercising control.

Bank of Scotland International was owed $74.65 million at March 2010, according to Noel Leeming’s most recent financial statements.

Gresham spokesman Richard Leather told NBR the debt had been refinanced with arrangements in place until at least 2013.

“Yes we’ve appointed Macquarie to look at what our options are over the short to medium term. But we’ve got plenty of runway, and plenty of time to evaluate what our options are and to assess whether or not now is a good time to start any process.

“But it’s not for sale at this time.”

Mr Leather said the business is going as well as can be expected in difficult environment.

“Market share is at all time highs,” he said.

Noel Leeming, which also owns the Bond & Bond chain of stores, is due to file its financial accounts for the March 2011 year.

In the year to March 2010 the group suffered a loss of $2.7 million, despite revenue climbing 6% from $487.9 million to $515.7 million.

Total borrowings of $109.9 million included term loans of $74.6 million.

“The banks have extended the finance until at least 2013 so it’s nothing to do with them either,” Mr Leather said.

“The same story has been around about 100 times since we acquired this asset.”

One source told NBR the Bank of Scotland wanted out. The bank has been aggressively exiting its lending positions on distressed assets in New Zealand in recent months.

“[Gresham] is putting a reasonably brave face on it saying the banks have supported it but Gresham has the message,” the source said.

Certainly Gresham has owned Noel Leeming for a longer time period than is normal for private equity ownership.

In 2007 sale rumours circulated with likely buyers touted as industry heavyweight Harvey Norman and supermarket chain Woolworths.

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This would make me nervouse if I was a landlord to the Noel Leeming Group.

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Poetic justice for a private equity fund to be stitched up for a change.

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