Everything appears on track for transition for Z Energy following its acquisition of Chevron New Zealand's Caltex assets, Forsyth Barr broker Suzanne Kinnaird says.
Settlement is on Wednesday. Z said in a statement it was confident of the savings it would make from the $785million acquisition of Chevron New Zealand's Caltex and Challenge petrol station chains, which it predicted would be up to $30million.
In a statement, Z said it was confident in its previous guidance of between $25 and $30million in savings once the companies were integrated.
The company would update the market in the last week of every month until October as it worked to smooth the acquisition, but said until settlement occurred, Chevron remained a competitor and all actions it took would be planned and prepared for in such a way that the competitive integrity of the two companies was preserved at all times.
Z would provide operational data for the June quarter in mid-July, but said this would exclude Chevron data.
The first combined operational data would be released in October.
Ms Kinnaird said it would take time before the market was fully informed but the monthly update would provide update benefits which would be the first sign of potential upside from the transaction.
The key points announced by Z included the divestment programme of 19 retail sites and one truck stop would be completed by the end of March next year.
Z was reporting a strong level of interest, although it was not going to say anything different, she said.
In mid-October, Z would host an investor day, outlining its plans for its new core business, highlighting insights gained through the integration process and updating the market on any metrics or modelling assumptions.
When announcing its full year results two weeks ago, Z said it would fund the acquisition through a mix of cash and bank debt, and would undertake a retail bond issue to reduce the level of bank debt and replace a retail bond which would mature on October 15.
The timing of the bond was yet to be confirmed.
Z had net debt of $354million for the year to March 31, up from $224million a year earlier, which included a $79million deposit for the Chevron acquisition.
It said the transaction would be financed by $115million in cash, $705million in additional debt, and the proceeds from selling 19 retail service stations and one truck stop to satisfy the Commerce Commission.
The fuel retailer has Chevron's financial statements for the 2015 calendar year, but will not have access to the company's operating plan for the current financial year until settlement.
In its annual results, Z said it had spent $25million preparing to integrate the new business into its IT system and another $7million in capital expenditure.
It expected to spend a further $24million in operating expenditure and $9million in capital expenditure in the first half of 2017 "to settle the transaction and complete cut-over''.
Last week, it said adopting the new fuel stations into its IT systems had 600 separate milestones and was being undertaken by 200 people.
Progress was being reported twice daily to Z's executive team.
- Additional reporting BusinessDesk
