FRONTIER PETROLEUM NL 2000-04-27 ASX-SIGNAL-G
HOMEX - Perth
+++++++++++++++++++++++++
Frontier Petroleum (ASX: FRO) today announced that it has entered
into an agreement to acquire what will be Australasia's largest
receivables management company.
Under the agreement, and subject to Frontier shareholder approval, a
$A100 million ($NZ120 million) business will be established when
Frontier acquires the assets and business interests of Receivables
Management Limited (RML) and a number of associated companies in
Australia and New Zealand.
Consideration will be for a total price of $A80 ($NZ96) million paid
by the issue of approximately 300 million Frontier ordinary shares at
a value of $A0.20 ($NZ0.24) each and $A20($NZ24) million in cash.
Post acquisition of RML and the associated companies, and subject to
shareholder approval, Frontier will change its name to RMG Limited.
On completion of the transaction a total of approximately 475 million
shares in RMG will be on issue and will trade on both ASX and NZSE.
The acquisition is subject to a number of conditions including due
diligence and the raising of $A25 million ($NZ30 million) via a
placement of shares.
LARGEST IN AUSTRALASIA
RMG will not only be Australasia's largest receivables management
company, it will be the first company operating on both sides of the
Tasman to offer an integrated range of receivables, debt management
and credit reporting services under a single umbrella.
Clients who have traditionally had to deal with several agencies will
now be able to obtain a full range of services from one company.
Services will include traditional debt recovery and receivables
management, credit information services together with database
management, debt purchasing, factoring, ledger management and even
complete outsourcing of a company's receivables function by deploying
leading edge internet-enabled technology.
CULLEN INVESTMENTS A MAJOR SHAREHOLDER
Once the transaction is complete, Cullen Investments Limited, which
is one of the vendors of Receivables Management Ltd, will hold
approximately 27% of the shares in RMG. This will include an indirect
interest held through its 60% shareholding in ElderCare New Zealand
Ltd (NZSE: ELD), which is currently a substantial shareholder in
Frontier.
Cullen, the private company of New Zealand based investor Eric
Watson, also has a 9% interest in Strathmore Group Ltd (NZSE: SMR),
which converts its 43.6% shareholding in CreditNet to shares in RMG
as part of the transaction.
BUSINESS MODEL, PRODUCTS AND SERVICES
Commenting on the announcement, Frontier CEO, John Tarrant, said that
the target date for concluding the transaction was June 2000. He also
announced that the chief executive of RMG will be Mr Paul Cooney, a
30 year veteran of the industry and current national president of the
Australian Collectors Association.
"Historically, the receivables management industry has been
fragmented, comprising many small players offering a limited range of
products and services," Mr Cooney said.
"RMG will have the mass, resources and capabilities, unique
information and intellectual property sufficient to meet all client
service requirements under the one roof. We believe we will be able
to lead the industry in meeting the expected demand from both the
public and private sectors for outsourcing the management of a range
of functions such as ledger management, debt purchasing and a variety
of other services including credit information," he added.
"Larger full-service receivables management companies, on which RMG
is modeled, have been the norm for some time in the United States and
Europe. This merger will create a real choice for companies looking
for world class standards in systems and results. And by leveraging
the Intellectual capital that already exists in some of the
constituent companies, we will be able to deploy new generation
Internet-enabled technology to deliver its services to customers in
Australia and/or New Zealand."
POST-TRANSACTION OPERATIONS
Post transaction, existing shareholders of FRO will hold 19% of
shares of the new company and shareholders of the merging companies
will hold 64% with 17% held as result of a private placement of
shares.
Gross revenue in the twelve months ending 30 June 2001 is expected to
be A$57.5 million (NZ$69 million, representing an estimated market
share of 20% of the combined Australian and New Zealand markets of
A$280 (NZ$335) million. The growth potential of new services such as
debtor ledger management, debt management and debt purchasing mean
that the combined market is expected to reach A$500 (NZ$600) million
within two years. Based on the capabilities of the new company, RMG
believes it can capture at least 20% of this.
Additional growth is also expected to come from the region's A$100
(NZ$120) million credit information market, which RMG will be well
positioned to develop. A new part of RMG's service offering will be a
comprehensive commercial credit reporting service. Consumer credit
checking capabilities in Australia and New Zealand will also be
provided through a new RMG-owned company, CreditNet International
Limited, which will lead the development of a new regional
information service.
INTERNATIONAL NETWORK
Mr Cooney said the new operation's receivables division, trading as
Receivables Management Limited in Australia and Receivables
Management (NZ) Limited, will have an international network of 21 of
its own offices in Australia, New Zealand and Malaysia, and global
reach through strategic partnerships.
"The first of these alliances, announced recently in the US, is with
the world's largest receivables management company, NCO Group Inc
(NCO), of the United States, he said. "The alliance will allow RMG to
provide services for NCO's clients throughout Australasia, including
Malaysia, Hong Kong, Singapore and China. In return, NCO will provide
services for RMG clients in the United States and Canada."
STRONG MANAGEMENT TEAM, BROAD GEOGRAPHIC COVERAGE
Joining Mr Cooney in managing the operating company, Receivables
Management Limited (RML) will be Mr Wayne Slack from Laurens & Co,
who will have responsibility for sales and marketing; Mr Bill Duncan
from Receivables Management (NSW), for business support and
development; and Mr David Ellis from CSA Mercantile, for e-commerce
and information technology.
Executives from the merging companies will also take on senior
management roles within RML. Mr Kevin Hollister will assume the
position of state manager in South Australia, Mr Keith John will be
state manager Western Australia, Mr Terry Clee sales manager New
South Wales and Mr Ian Coates, special sales manager. Mr Bob Garters
and Mr Stuart Christie will take the senior management roles in New
Zealand.
AUSTRALIAN COMPANIES MERGING IN RMG LTD ARE:
AMBA (Australian Mercantile Bureau and Agency); Atlas Collections and
Compass Collections (collectively known as Commercial Debt Collection
Service); Commander Credit and Collections; CSA Mercantile; Laurens &
Co; Pioneer Credit Management Services; Procol; and Receivables
Management (NSW) and Receivables Management (Vic).
NEW ZEALAND COMPANIES ARE:
Canterbury Credit Consultants; College Credit Management; Creditnet
International; Debtor Management (NZ); Northern Credit Consultants;
and Otago Credit Consultants.
The new company will have offices in all major centres in Australia
and New Zealand including Sydney, Melbourne, Perth, Brisbane,
Adelaide, Auckland, Wellington and Christchurch, complemented by call
centres in Sydney and Melbourne and provincial Victoria.
Issued on behalf of the Board of Frontier Petroleum by John Tarrant,
Chief Executive Officer, Frontier Petroleum NL.
For further details contact John Tarrant
Phone 00 61 8 9322 9009
Fax 00 61 8 9322 9003
Mobile 00 61 414 725 622
Email John.tarrant@bigpond.com
|
See IRG research reports
