Charlie's spurns 'low-ball' offers

Wednesday 17th June 2009

Charlie’s Group turned down ‘low-ball’ takeover offers from multi-national rivals and is mulling opportunities to raise capital and reduce debt as it aims to turn profitable in 2010.

Shares of the unprofitable juice maker sank to a record low eight cents in late March and last traded at 11 cents, valuing the company at $31.9 million. The stock reached 25 cents in January 2007.

“Our share price is at the lowest of all lows,” chief executive Stefan Lepionka told BusinessWire. “We’re seen as a target at that point,” he said. “We do have something of value and they (the multinationals) know that.”

Charlie’s retained ABN AMRO Craigs to help assess the offers though it hasn’t yet appointed anyone to assist with capital raising, Lepionka said.

“At this stage we do have lots of options to consider.” Tapping existing shareholders was one option though it raised the question of dilution, while a strategic alliance with another drinks company could help fuel growth, he said.

The Auckland-based owner of the Charlie’s and Phoenix Organics brand drinks posted a net loss of $661,000 in the six months ended December 31 and expects a similar result in the second half. As Charlie’s expands, costs are rising faster than revenue. Gross sales surged 21% in Australia in the first half from a year earlier.

Since listing in 2005, the company has pursued an “investment for growth” strategy. Total liabilities stood at $10.6 million at Dec. 31, with borrowings of $6.6 million.

Charlie’s hasn’t decided yet how much debt reduction it will target.

“The goal going forward, we want to crystallize a lot of that investment into profitability in the year starting July 1,” said Lepionka, whose first juice venture, started when he was 17, was acquired by Frucor Beverages.

Businesswire.co.nz

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