Tourism firm hatches submarine export plan

By Nicholas Bryant

Friday 10th November 2000

THE ANTIPODES: The first of three company submarines

Underwater tourism venture Submarines Australasia has undergone a significant metamorphosis since releasing its prospectus.

Intended as a tourism stock, the Dunedin-based company, which plans to operate submarines in Milford Sound and Lake Wakatipu, now hopes to become a deepwater submarine builder and exporter as well.

Submarines Australasia promoting broker John Reuhman of Reuhman & Co, also a director of the company, said a surprising number of inquiries had been made about whether submarines could be built here for scientific research and other tourism ventures.

Mr Reuhman said Submarines Australasia was in negotiation with three parties, one of which, from Australia, he considered close to a deal.

The other two inquiries have come from Niwa and the Institute for Geological and Nuclear Sciences, the latter about to start an underwater survey of tectonic plates around New Zealand.

Mr Reuhman said he believed six people could be employed fulltime building submarines for export given the present level of inquiry.

The change of outlook is likely to please critics.

Some analysts doubted whether Submarines Australasia could pull in enough punters over a sustained period with a submarine ride in Milford Sound costing an average of $450. Their concerns were heightened by rapid expansion plans requiring significant capital.

The company plans to build more subs, possibly three 10-seaters at $3.2 million each, in the next five years.

In its prospectus the company made it clear it will be highly dependent on the flow of inbound tourists, a flow determined by factors outside its influence, like the performance of tourism marketers, exchange rate differentials and its own marketing against the myriad of other tourist ventures.

Although no projected earnings are required of a New Capital Market listing, Submarines Australasia needs to catch 10,000 of the 405,000 tourists who travel to Milford Sound each year for the initial part of its business to be successful according to Mr Reuhman.

Applications for consent to operate three submarines in Lake Wakatipu are pending.

Cross-booking arrangements had already been made with helicopter, fixed-wing and other tourism companies, Mr Reuhman said.

The company has drawn strong investor support.

The prospectus and investor statement had to be sent off for a second print run after almost 700 people registered an interest.

The unusual nature of its business has prompted some humorous debate.

"Can anyone give me some thoughts on this submarine company?" was a request innocently posted on the Sharechat website.

"Having looked at it I think it will go under. Sorry, couldn't help it," came a cheeky reply.

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