The acquisition completes a full-circle of ownership of THL's southern assets.
They will come back into the Otago sphere of control after having their origins in Wanaka in the early 1970s with businessmen Graham Gosney, Sir Tim Wallis, Don Spary and Reid Jackson.
The company was initially known as The Helicopter Line and later listed as THL.
THL yesterday estimated the Milford sales and the sale of an Auckland coachline will generate proceeds of $26 million and one-off gains of about $9 million.
However, the tourism operator also announced a profit downgrade yesterday of as much as $3 million, from an earlier estimated $16 million to $18 million profit, to between $15 million and $16 million, THL chief executive Trevor Hall said in a statement.
"Since March, trading conditions across most businesses have worsened in New Zealand, due to reduced international arrivals from source markets and lower than anticipated levels of travel booked for the winter period," he said.
THL shares yesterday shed 10.7%, on light volumes, to close down about $1.50.
The family-owned Skeggs Group, more than 50 years old, has a turnover of more than $100 million and employs some 500 people.
It has wide-ranging business interests including seafood processing, shipping, tourism, property and wine.
Skeggs Group chief executive David Skeggs said the purchase fitted well with the group's other predominantly southern business interests.
There was long-term potential for further tourism-related developments in the Milford Sound area, but there were no immediate plans to change the business model until Skeggs had "settled in" with its everyday operations.
He said Skeggs Group had produced a "healthy balance sheet" to enable it to buy the THL assets, as opposed to funding by other asset sales or debt funding, and the group would continue to look for other acquisitions.
The Milford assets include five day-trip Milford Sound Red Boats, the Milford Deep Underwater Observatory, the Blue Duck Cafe and a 49% shareholding in the infrastructure organisation Milford Sound Development Authority (MSDA).
MSDA owns the Milford Sound terminal and wharves and other infrastructure assets, with tourism rival Real Journeys and THL each having 49% and the 2% balance held by the Southland District Council.
Mr Skeggs hoped the sale would go through within about two months, saying the "subject to certain commercial conditions" clause in the agreement was standard practice, as it covered the transference of ownership and Department of Conservation concessions.
"Now that things have gone public, we can talk with Doc and others. It's not something of major concern, just has to be worked through," he said.
THL also sold its Auckland Airbus business to Johnston's Coachlines Ltd (JCL) and its 33% share in JCL, which is finalising its purchase of THL's Kiwi Experience coach fleet, which would then be leased back to THL - sales which would generate revenue of $9 million and a gain of $4.5 million Mr Hall said THL would use the $26 million proceeds to reduce debt and to enable it to focus on its core businesses.
"These transactions will bring an end to THL's extensive period of change," Mr Hall said.
It would now concentrate on its New Zealand and Australian car and motorhome rental businesses, including the low-cost youth market, redevelop its Waitomo Caves visitor centre and its 49% shareholding in the InterCity Group joint venture.
THL's relocation of its CI Munro motorhome manufacturing plant to Hamilton was not without problems, with changes to fibreglassing technology creating manufacturing delays plus third party supplier problems.
Mr Hall said that, as a consequence, CI Munro would record a loss of $3.8 million after tax.
"The gains from asset sales less the CI Munro result, other non-recurring costs and the lower winter trading will lead to the full-year result being similar to last year at $13 million to $14 million net profit after tax," he said.
"The remainder of 2008 and summer 2009 remain difficult to forecast due to the current global environment. However, THL's balance sheet and low debt positions it well for market consolidation and opportunities," he said.
In May last year, THL was the target of an unsuccessful takeover bid, which ultimately saw Australian tourism giant MFS Living and Leisure having to sell its 10.2% at a loss on the share price of more than $5 million.
MFS launched a 10-week conditional takeover offer in May 2007, at $2.80 a share, valuing THL at $277 million. However, by late July, it had gained only 83.1% acceptances, falling short of the 90% it wanted which would have forced compulsory acquisition of the outstanding 10%.
A successful takeover would have propelled MFS to a position as the dominant tourism operator in Australia and New Zealand, combining its interests in aquariums and ski resorts in Australia and Asia with Tourism Holdings' more than 18 brands, including Red Boats Milford Sound, Kelly Tarlton, Waitomo Caves, plus campervan manufacturing and hire, holiday buses and ferries.
During the period of the offer, a 10.2% Tourism Holdings stake was sold by Cushing family interests, outside the takeover offer, which could have been used to block any subsequent takeover bids. The Cushing sale was at $2.76 per share, for a total of $27.14 million.
The Assets
THL assets acquired by Skeggs Group for $17.3 million -
• Five Milford Sound Red Boat passenger vessels.
• Milford Deep Underwater Observatory.
• Blue Duck Cafe.
• A 49% share in Milford Sound Development Authority.
