In a deal worth $69.6 million, the camper van rental arm of Tourism Holdings Limited (THL) will merge with two of New Zealand’s leading tourism businesses: United Campervans and KEA Campers
Subject to 50% shareholder approval, THL forecast the deal will lift operating profit to $19.3m from $16.3m in FY2012, and lift assets to nearly $350m from $280m.
In the year to June 30, 2014, the first full year following the merger, operating earnings are forecast to rise to $28.8m, while after-tax earnings per share are forecast to rise to 13.3 cents per share, more than twice the level of FY2013.
The deal aims to optimise THL’s international sales and service infrastructure, and create a strong advocate for New Zealand tourism in the high value European and UK markets.
United Campervans principal Kay Howe will join the Tourism Holdings’ board as an executive director to help with the integration.
“I am delighted to have the chance to join the THL board at such a critical point in its history. THL combined with United and KEA, has a great future and will be a powerful advocate for New Zealand tourism, particularly in high-value international markets,” says Howe.
Grant Brady, KEA principal and managing director will lead RV Manufacturing Campervan Group (RVMC), which he has a 50% shareholding in, along withTHL. It is also proposed that he lead the company’s New Zealand vehicle sales operation – two critical components to the rentals business model.
“I am looking forward to the opportunity to focus on my core capabilities of vehicle construction management at the RVMG manufacturing operations and leading the New Zealand vehicle sales business,” says Brady.
“KEA has grown to the point where it fits comfortably and can prosper within the THL stable. KEA, United and THL have a great future together.”
Post completion, Howe and Brady will each represent around 5% of the ordinary shares in THL. These shares will remain in escrow for six months. They will be eligible for release periodically over the subsequent 12 months.
The consideration paid to KEA Campers and United Campervans includes refinancing of $50.9m debt, the issue of 12m THL shares at $0.619 per share and cash of $3.2m. A deferred payment of up to $8.0m is contingent on vehicle selling prices meeting expectations.
THL chairman Keith Smith says “This merger is logical, strategic and the best response to the challenging realities of the current New Zealand market.
“THL is the industry player that already has the scale to market New Zealand tourism and New Zealand campervan vacations to a broad international audience and therefore the best placed to make the most of the additional brands”.
THL has commissioned Cameron Partners Limited to complete an independent report for shareholders on the merits of the proposal. Cameron Partners’ report and a Notice of a Special Meeting will be sent to shareholders during September. The merger is scheduled for completion on 31st October, 2012.
