Forum Archive Index - June 2000

["Ben Dutton" <bendutton@sharechat.co.nz>]

Well, it looks like the rumours of The Warehouse purchasing Clint's Crazy
Bargains and Silly Solly's have come true - a copy of the full announcement
below.

A positive response from the market so far - WHS up 15c.

Benjamin Dutton
(Disc. do not own shares in WHS)


ASSET: WHS: AUSTRALIAN ACQUISITION AND BUYBACK

The Warehouse Group ("The Warehouse") today announced the purchase of
Clint's
Crazy Bargains and Silly Solly's, two Australian discount variety chains
operating in four Australian States.  The up-front acquisition cost to The
Warehouse is A$105m with a potential earn-out of up to A$24m in addition to
this if the Australian retail operation meets earnings targets by the year
2003.
The acquisition is subject to a number of conditions including normal
regulatory approvals and the completion of a small number of subsidiary
agreements.  Effective completion is due on 01/08/2000.  The acquisition
cost
is subject to adjustment following the completion of audited settlement
accounts.
Senior management, who are the founders and major shareholders, will
continue
to be retained in the business.  Dave Rickards, the current CEO of Clint's
will continue in that role and will report to Greg Muir, CEO of The
Warehouse. Dave Rickards will be appointed to the Board of The Warehouse
Group in 08/2000. Greg Foran, a Warehouse executive with extensive
experience
in Australian retailing will become Chief Operating Officer of Clint's and
Solly's based in Australia.
Initially, the acquisition will be funded through a combination of cash (A$7
million), the assumption of existing debt of Clint's (A$70m) and the issue
of
new shares in The Warehouse to the vendors of Clint's and Solly's (A$19m).
Of
these, A$17m shares are subject to a restraint on sale for a two-year
period.
The new shares are to be issued at the weighted average price of The
Warehouse shares traded on the NZSE calculated over a period five days prior
to and five days following the signing of this agreement.
The Warehouse also intends that a further A$14m of new shares will be issued
to team members in Australia later this year.  The cost of issuing of these
shares, less an expected A$5m associated tax benefit, will also to be
treated
as part of the cost of the acquisition.
Offsetting the new shares being issued as part of the acquisition, The
Warehouse proposes to conduct an on-market buy-back of shares equal to the
value of the shares issued to the vendors and to Australian team members.
The on-market buy-back will take place over the next 12 months in the
allowable trading windows.      The first allowable trading window is
expecte\
open in early September following the release of The Warehouse annual result
and to close on 31/12/2000.  Neither the vendors nor the 'Tindall interests'
will participate in the buy-back.
The earn-out, to be calculated in year 2003, requires the business to
achieve
a minimum EBIT of A$20m in that year with the maximum pay-out being achieved
if EBIT reaches A$30m.  The earn-out will be satisfied via the issue of new
shares in The Warehouse at an issue price of NZ$4.50 per share.
In the current year ending 30/06/2000, sales for the combined Australian
operation are expected to exceed A$300m with Clint's recording a cumulative
annual growth rate in sales of 19% since 1995.  For the same period, pro
forma EBIT for the business is expected to be A$14.8m. The book value of net
assets funded by shareholders funds and debt for the two businesses total
A$82m.
The acquisition is expected to be moderately earnings positive to The
Warehouse's earnings per share even after goodwill amortisation in the year
to 31/07/2001. Longer term, The Warehouse is targeting continued sales
growth
and operating improvements which have the potential to provide substantial
profit contributions.
END.
End CA:00057099 For:WHS    Type:ASSET      Time:2000-06-20:08:30:30
Encrypt:Y


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