Airwork looks for $40M Christmas present in latest IPO
Aviation services firm Airwork Holdings wants as much as $40 million in the last float before Christmas, which it will put towards funding operations, buying back shares from controlling shareholder Hugh Jones and repaying debt.
The Auckland-based company plans to sell about 15.4 million shares at $2.60 apiece in an initial public offering, and wants at least $30 million in what will likely be the last NZX listing of the year. That implies a market capitalisation of $130.6 million, putting it in the middle of the NZX main board below carpet-maker Cavalier Corp and just ahead of intelligence software developer Wynyard Group.
Of the funds raised, some $15 million has been set aside to pay for the $1.9 million IPO cost, be applied to Airwork's revolving cash advances facility and be available for general business purposes and a further $5 million will repay a subordinated loan from Airlift Holdings, a company associated with Jones.
The new funds are expected to provide Airwork the flexibility to buy new aircraft if it's successful in building on recent European and African contracts, where it sees potential growth, and other opportunities in helicopter leasing, charter and engineering, it said.
That leaves between $10 million and $20 million to buy back shares from Jones, which will leave him with between 51.2 percent and 67 percent ownership, depending on the level of subscription.
"The IPO will see me sell down only a portion of my shares - I am not ready to sign out just yet - and as a director will, with my fellow board members, support Chris Hart in his new role as chief executive officer," Jones said in the documents. "The IPO gives Airwork a strong foundation to grow and succeed and I still intend to be part of that."
Still, the float won't flood Airwork's coffers with funds, and the company forecasts cash and equivalents of $4.64 million as at June 30, 2014 from $4.69 million in 2013. That's largely down to some $22.2 million of capital expenditure tagged for growth chewing up cash in investing activities during the 2014 year. Operational cash inflows are expected to lift cash and equivalents to $7.29 million by Dec. 31, 2014.
Airwork will become the latest company to join the NZX this year in a busy year for listings, including the partial privations of state-controlled power companies Meridian Energy and MightyRiverPower, service station chain Z Energy, dairy processor Synlait Milk and Wynyard.
The company forecasts annual net profit of $8 million in the year ending June 30, 2014 on sales of $125 million, up from profit of $6 million and revenue of $118 million in 2013. Airwork anticipates about two thirds of its 2014 sales will be derived from contracted sources, and typically earns a little more form its fixed-wing division than its helicopter unit. About 73 percent of its 2013 revenue was sourced from overseas.
Airwork expects earnings before interest, tax, depreciation and amortisation of $39 million for 2014, though that could get a boost depending on the outcome of a contractual dispute with Skyline Enterprise's subsidiary The Helicopter Line.
The company is seeking $2.02 million in a summary judgment in the High Court in Invercargill, something it judges as likely to succeed, which would lift its earnings above the forecasts.
Airwork anticipates an annual dividend of 14 cents per share in the 2014 financial year, implying a gross dividend yield of 6.4 percent.
Chairman Mike Daniel said the investment is a "proposition with growth prospects and a sound dividend yield."
The IPO is made up of a broker firm offer and an institutional firm, and won't have a public pool. It opens on Nov. 27, closing on Dec. 13, with a listing expected on Dec. 19.
First NZ Capital has been appointed lead manager and organising participating, and Deutsche Craigs as co-lead manager.