Just Water shareholders approve AU$11m sale of Australian business
Just Water International [NZAX: JWI], the water cooler and supplies business 79 percent owned by founder Tony Falkenstein, got the green light for the sale of its Australian business for A$11 million, a transaction that will leave it debt free.
The Auckland-based company said 76.7 percent of shareholders voted on the proposal to sell the business to Waterlogic Australia to repay debt and fund growth and 100 percent of those voted in favour.
Just Water intends to use the sale proceeds to repay its existing $10.7 million net debt to Bank of New Zealand.
Just Water said it was approached by Waterlogic this year about the acquisition of the Australian water dispenser rental and servicing business. It says the offer values its Australian business at 6 times 2014 annual earnings before interest, tax, depreciation and amortisation, compared with a KordaMentha valuation of the Just Water group at 4 to 4.5 times earnings.
"Retaining the Australian business [if valued at the purchase price of A$11 million] produces a lesser return for the group relative to sale," the company said at the time. Growth opportunities for the Australian business were limited because of a lack of new sites, pressure on rental rates and minimal new product development.
The sale required shareholder approval because the purchase price exceeded 50 percent of Just Water's market capitalisation. The shares last traded at 15 cents on the NZAX, valuing the company at about $13.5 million.
Mr Falkenstein's investment vehicle, Harvard Group, made a full takeover bid for Just Water last October at 15 cents a share, trumping an indicative offer of 14.6 cents from an unidentified overseas buyer. He fell short of the target to take the company private, acquiring about 8 percent of the shares he didn't already own.
Waterlogic, which has operations in 50 countries, was acquired in January by European private equity investor Castik Capital which aims to create a leading global water cooler business.