Forum Archive Index - April 2000

["David Thompson" <dvd_tpn@hotmail.com>]

WATSON CHALLENGES BAYCORP

By Garry Sheeran

Companies owned by Eric Watson stand to benefit directly from the new 
Australasian debt collection company set up last week with the backing of 
the Auckland-based businessman.

Paul Cooney, managing director of Receivables Management Group (RMG) Ltd, 
said Watson recognised the potential in receivables managemen business on 
both sides of the Tasman.

"And as far as New Zealand is concerned, this will be the first time Baycorp 
has had any real opposition," said Cooney.

He also said Watson's existing business interests stood to gain from 
synergies with the new business, given a back-door sharemarket listing 
through Perth-based miner Frontier Petroleum.

"Pacific Retail Group will obviously be one of his businesses that will 
benefit from the receivables and credit information sides to RMG," said 
Cooney.

A $120 million deal will see Australasia's largest debt collecting company 
emerge from the shell of Perth-based mining company Frontier Petroleum.

New Zealand Petroleum, 62% owned by a Watson business, has a 20% stake in 
Frontier, and the New Zealand businessman has been a key driver in the 
establishment of the new business which take on highly successful Baycorp 
Holdings.

RMG has brought together six New Zealand and 10 Australian debt collecting 
companies to form a new entity which Cooney claims has the clout to 
seriously challenge Baycorp.

He said RMG would have total Australasian revenues of A$57m for the 2000 
year, compared with a figure of just under A$40m for Baycorp.

"And we will look to add to both the numbers of companies in the group and 
the level of business we do."

Baycorp managing director Keith McLaughlin said the prospect of more 
competition could only be good "not that we have been without that".

He said Baycorp had been competing with more than 250 debt collecting 
agencies.

"We have been aware that Eric Watson has had his eyes on us for some time 
and the move comes as no surprise."

Arthur Lim, analyst with broker Ord Minnett, said Watson's move into 
debtcollecting was consistent with his strategy in other areas of business 
over the past decade.

"First in office supplies, and then in healthcare, he has seen a fragmented 
market, moved in and pulled several players together to form a more 
effective business unit," said Lim.

He said the debt collecting business had been fragmented for many years and 
was a perfect scenario for the kind of strategy Watson had employed in the 
past.

"Just how successful he will be we'll have to wait and see what the next two 
to three years bring."

He said while there were many debt collecting agencies in New Zealand, there 
was just one name for big business - Baycorp.

"That is because of the dept and accuracy of their database. If the new 
company is going to succeed, it must tackle Baycorp at this point," said 
Lim.

RMG will be dual-listed in New Zealand and Australia and Watson's private 
company, Cullen Investments, will hold a 27% stake.

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