Southern Capital shares ease on Hirequip purchase news

By Chris Hutching

Friday 23rd August 2002

Listed Southern Capital has embarked on its first industrial investment with the purchase of half of national company Hirequip for $17.3 million from Australian-based Grant Samuel Private Equity.

Southern Capital, a company founded by Dunedin businessman Howard Paterson, has been mainly associated with bringing property developments to the market.

It also holds stakes in other biotech companies Mr Paterson has set up such as Blis Technologies.

The chairman of Hirequip, Dunedin accountant and investor Trevor Scott, is also on the Blis board.

Southern Capital executive chairman Graeme Wong said Hirequip, with annual revenues of $50 million, would focus on Auckland, add more branches to the 36 outlets it already has and possibly buy other smaller service providers.

Before the purchase Southern Capital was debt free with about $5 million in the bank after earlier this year selling its 19-storey Flight Centre office building in Emily Pl, Auckland, for $7.8 million.

This building was the last to be sold from the CBD New Zealand property portfolio, which Southern Capital inherited when the two companies amalgamated in 1999.

The other 50% of Hirequip will stay in the hands of managing director Stuart McKinlay and family, of Dunedin.

The company offers over 100,000 items of machinery for hire from excavators, front-end loaders, road rollers, trucks, generators, compressors, DIY equipment, plus a party and function division that provides marquees, toilets, crockery and lighting equipment.

Southern Capital will be represented by two directors, Messrs Wong and Paterson.

The share price eased from 67c to 61c mid-week, possibly because some investors view the move to take on more debt negatively.

Southern Capital does not pay dividends so shareholders receive rewards from when they sell their shares or on a capital repayment if or when the company is wound up.

Southern Capital owns a site north of Christchurch earmarked for its the Pegusus Bay township development and is the major shareholder in a 600-lot Omaha Beach residential development north of Auckland.

It also has interests in a 460ha marine farm application at Clifford Bay, the Canterbury retail Supa Centa and a proposed motorway service area near Kaiapoi.

Among its investments are 10.4% of Blis Technologies, 8.9% of A2 Corporation, 5.6% of soon-to-list Botry-Zen and 5.6% of Pharma-Zen.

It also has 21.7% of Tasman Farms, Tasmania.

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