Freightways in brokers' sights

By PAM GRAHAM

Freightways, owner of New Zealand Couriers, Post Haste Couriers, Castle Parcels and Sub60, will float on the stock exchange in just over a week.

The news, delivered yesterday alongside a 33 per cent increase in profit, was warmly received by stockbrokers, who regard the company as well-managed and well-positioned in its market.

Price and the final size of the offer are still being worked on.

Brokers are guessing a $160 million to $180 million sale, putting the company in the market's Top 50, and making it the biggest float of a New Zealand company this year.

The offer will be of existing and new shares in Freightways. Joint lead managers are ABN Amro Rothschild and First NZ Capital.

Vendor ABN Amro Capital, the private equity arm of Dutch bank ABN Amro Holdings, is expected to retain about 20 per cent of Freightways.

About $17.5 million of new shares will be sold to assist with a redemption of $60 million of preference shares. Holders of preference shares will be able to exchange some of their stake.

The sale will open on or about September 1 and close on September 12. The prospectus is expected to be available on Monday week.

Shares will be sold to institutions, through brokers and there will be a $20 million public pool.

Pricing will be set by a book build, a process that marries demand for and supply of shares to set a price.

The size of the public pool raised some brokers' eyebrows as unexpectedly large.

NZX chief executive Mark Weldon said selling direct to the public, rather than through allocations to brokers, increased participation in the sharemarket, which he applauded.

News of the float was "brilliant", he said.

"It's a well-constructed offering."

Others were in the pipeline but they were confidential "and you never know if they will go through".

Freightways was operating in an expanding sector and would have enough shares listed to ensure liquidity.

"It is exactly the sort of thing you would love to see come to market," said Weldon.

The float follows the listing of insurance company Promina, the NZX itself, and Urbus. Retailer Postie Plus has also announced plans to list.

Lines company Vector pulled its float this week and the market will lose Tranz Rail if Toll Holdings' takeover is successful.

"The market considers Freightways a good company with very good management, a very good managing director and stable cashflows, but with some growth prospects," said Andy Coupe, of UBS Warburg.

Although the courier market was perceived to have low barriers to entry, it was difficult to build a good network, he said.

Freightways was the pioneer of courier deliveries in New Zealand and has about 39 per cent of the express freight market.

Its main competitor, New Zealand Post, is larger, with a market share in the mid-40s.

Freightways Express also owns Air Freight New Zealand, Fieldair Engineering, Parceline Express, Security Express, DX Mail and a range of document services businesses.

Yesterday, it reported a net profit of $17.3 million for the year to June 30, up 33 per cent on last year and achieved on revenue of $196.5 million.

Brokers said the company should be worth about eight times earnings before interest, tax and amortisation next year, minus debt. Ebita this year was $32.5 million and total liabilities were $63 million.

The Freightways board is chaired by Wayne Boyd, with Sir William Birch, Warwick Lewis, Sue Sheldon, Michael Taranto and chief executive Dean Bracewell as members.

Nat Vallabh, of AMP Henderson, said the company was "one we'll have a good look at".

Bracewell, who has been with the company for 18 years, said there were concerns in the marketplace about the strength of the economy next year but the company had not yet noticed any slowdown.