Southern Capital poised to become wholly hire firm

By NZPA

Monday 10th March 2003

Wellington-based investment company Southern Capital is poised for a change in direction after today being offered total ownership of hire company Hirequip.

Already a 50 percent stakeholder, it has been offered the half held by the Dunedin family of managing director Stuart McKinlay in return for shares.

The move would see the McKinlay Family Trust become Southern Capital's largest shareholder and see Southern Capital renamed Hirequip Ltd, remaining as a public company.

Today's announcement follows a Commerce Commission decision on Friday to give Southern Capital permission to buy another hire company, Hirepool.

Southern Capital chief executive Graeme Wong said the Hirequip move was independent of any investment it might make in Hirepool.

"There is a price at which buying Hirepool makes sense, but if we don't win the bid for that company, then there are plenty of other opportunities in the hire equipment industry that we can and will pursue."

Hirequip, described by Southern Capital as the country's largest hire company since its purchase of Projex in late 2000, has an annual turnover of $50 million.

The proposed $17.86 million deal would see the McKinlay Family Trust receive 29.77 million new Southern Capital shares at 60c each, a 26.7 percent stake.

Mr Wong said the move would be "a significant and fundamental" shift for Southern Capital from diversified investment company to a predominantly industrial entity.

"We have been delighted with the performance of Hirequip since buying into it last year and the board considers that Southern Capital's shareholders will be served best by the company focusing on the growth opportunities available in the hire equipment industry."

A shareholders' meeting would be held at a date yet to be fixed, he said.

Part of Southern Capital's new direction involves selling its existing portfolio of property and stocks.

Southern Capital's assets include a 117ha subdivision at Omaha Beach north of Auckland, the 338ha new town site of Pegasus Bay, north of Christchurch, and the 7.7ha Canterbury Supa Centa at Belfast.

It also has a portfolio of biotechnology stocks, including a 10.47 percent stake in BLIS Technologies, and 21.75 percent of Tasmanian dairy farmer Tasman Farms Ltd.

Mr Wong said that since its formation in late 1997, Southern Capital's assets and particularly its land development assets had matured to the point where the company was now "asset rich".

Under the deal, Southern Capital's head office would be moved to Dunedin and Mr McKinlay and Trevor Scott would be appointed to the board.

Shareholder approval is required to issue the new shares and to waive the requirements of the Takeovers Code for the McKinlay Family Trust to make a full bid for Southern Capital.

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