South Canterbury Finance receivers have signed an agreement to sell a 79.7% stake in apple exporter and cold store company Scales Corporation to Direct Capital for $44 million. The Cullen Fund and ACC have been named as co-investors.
South Canterbury Finance receivers have signed an agreement to sell a 79.7% stake in apple exporter and cold store company Scales Corporation to Direct Capital for $44 million.
Direct Capital is a local investment firm headed by Ross George. The New Zealand Superannuation Fund and ACC have been named as co-investors.
Kerryn Downey of McGrathNicol said the sale price of $2-a-share ascribed a value of approximately $44 million for South Canterbury's 79.71% shareholding. The sale is subject to a number of conditions and is expected to be completed in the coming months.
The deal follows an agreement to sell Helicopters NZ to Canadian Helicopters for $160 million.
Both companies had been run separate from the core finance business of the SCF Group.
Both Scales Corp and Helicopters NZ were tipped into South Canterbury in February last year as owner Allan Hubbard tried to boost the finance company’s equity levels.
At the time South Canterbury valued the Scales shares at $72.25 million.
Mr Downey said while the price was lower it was still a good deal under the circumstances, bearing in mind it was a private equity buyer.
" We have been questioning some of the values quite frankly on that February 2010 transaction. We think they were overvalued. There have been some write downs in the value of both scales and HNZ following the acquisition of those shares by SCF.
"So yes the value is lower but in fact it reflects what we think is a good market value for the performance of the company, which is in excess of 6 times earnings, a multiple which is not bad in today’s conditions especially from a PE buyer."
Scales operating businesses include Mr Apple, the largest grower, packer and exporter of apples in New Zealand, Meateor Foods that exports processed meat used in the world’s leading pet food brands, New Zealand’s largest cold store network, a bulk liquids storage business and a logistics business.
Mr Downey commented: “We have worked very effectively with the company and our advisors and this is an excellent result. It will provide increased certainty to all of Scales Group’s stakeholders, customers, suppliers and minority shareholders. It’s very pleasing to have found credible New Zealand buyers for this leading multi-industry business.”
“Direct Capital as a new positive shareholder will provide Scales certainty in moving forward with its plans to develop and grow the Company,” says CEO of Scales Andy Borland.
Goldman Sachs & Partners New Zealand Limited acted as financial advisor to the Receivers of the SCF Group.
South Canterbury collapsed into receivership last August triggering a $1.6 billion payout to depositors under the Crown Retail Deposit Guarantee Scheme.
