Hellaby Holdings has made its first major purchase as the
company seeks to generate more of its income from offshore.
The company yesterday announced it had conditionally agreed
to buy an 85% majority shareholding in the specialised
industrial services Contract Resources Holdings Ltd from
Wellington-based investment firm Rangatira Ltd (50%) and a
group of existing and former management shareholders. The
purchase was conditional on confirming due diligence and the
finalisation of funding.
The purchase was due to be completed on March 31.
Contract Resources was valued at $116 million with Hellaby's
85% shareholding equating to a purchase price of about $73
Hellaby chief executive John Williamson told the Otago Daily
Times from France he was ''really happy'' with the purchase
of Contract, which ticked all the boxes.
''For the last 18 months we have been looking to get off the
island in a geographic sense. We have 5% of our revenue
generated offshore and for the last 18 months we have told
the market we wanted up to a third of our revenue generated
offshore by 2015.''
The purchase would mean 25% of revenue being generated
offshore, ''quite a change'' from 5%, he said.
Hellaby businesses were mainly mature and either one or two
in their respective markets. Contract Resources had been
growing for the past five years and Hellaby had bought the
business with expectations of further growth.
One of the positive signs was the shareholdings retained by
Contract Resources management. Chief executive Andrew Wells
and two other senior executives, Trevor Penny and Gray
Gardner, each retained a 5% shareholding, Mr Williamson said.
Contract Resources was a New Zealand success story. With
about 90% of revenue generated offshore, it offered the
portfolio and geographic diversification Hellaby had been
seeking. The company was heavily exposed to the oil and gas
sectors which Hellaby had identified as strategically
attractive. It also offered good intellectual property, he
''The company leads the industry in Australia, the Middle
East, the United States and New Zealand. The company is
expected to quickly have a positive impact on Hellaby's
For the 12 months to March 31, 2014, the company was forecast
to achieve revenue of about $150 million and operating
earnings greater than $20 million. In the year to June 30,
2012, Hellaby generated revenue of $498 million and operating
earnings of $37 million.
The purchase would be debt-funded with no need to raise
equity, Mr Williamson said.
While Hellaby was making the purchase on sound business
practices, it also meant a New Zealand company was kept in
New Zealand ownership.
''That makes us feel pretty good. There was a chance it could
have been sold offshore.''
Asked if more purchases were likely in the future, Mr
Williamson confirmed that Contract Resources was the first
but not the last acquisition for Hellaby.
Rangatira chief executive Ian Frame said in a statement that
Rangatira had not been looking to sell Contract Resources but
it had grown to represent more than a third of its unlisted
''With some of our initial partners selling and Hellaby's
offer for control at an attractive level, we have decided it
is an appropriate time to realise the funds of just over $50
million for reinvestment into other growth opportunities.''
In the half-year report, Rangatira indicated to shareholders
that the net asset value of its shares, including the
mid-point of their assessment of the unlisted companies, was
$9.26 at September 30 compared to $8.77 at March 31.
Assuming the Contract Resources sale became unconditional,
the net asset value of Rangatira's shares at March 31, 2013,
was likely to exceed $10.
• Founded in New Zealand.
• Is an international specialised industrial services
company. Provides specialised niche services to oil
refineries, gas-processing and petrochemical plants. Also:
broad range of environmental and industrial services,
including tank maintenance and environmental services.
• Operates internationally in Australia (its largest market),
New Zealand, the United States, the Middle East, Asia and