Freightways woos investors and names the day

By PAM GRAHAM

Freightways is set for a September 29 debut on the stock exchange, after selling between $138 million and $165 million of shares to the public.

The sale, formally launched yesterday, is mostly of shares owned by investor ABN Amro Capital and management, with only $17.5 million of new shares being sold to fund a redemption of preference shares.

Freightways will have a top 50 listing on the market and return to New Zealand ownership.

"It is a big opportunity for the New Zealand investor and hopefully they will front up," said chief executive Dean Bracewell.

Shares will sell for $1.55 to $1.90 each, with the price set by a bookbuild matching demand with supply.

Freightways' assets include New Zealand Couriers, Post Haste Couriers, Castle Parcels and Sub 60.

Fund managers and analysts were positive about the float but said they were still crunching the numbers. Issues included the debt level of $140 million, valuation of brands and assumptions underlying the predicted rise in earnings.

The company is being pitched at a higher price-to-earnings ratio than Mainfreight and Owens Group, but Freightways is in the more specialist express freight sector, where it has 39 per cent of the market and only one main competitor in NZ Post.

The company is not capital-hungry because the couriers are owner-drivers so the intention is to pay 75 per cent of net profit after tax and amortisation in dividends.

A dividend yield of between 9 and 10.8 per cent is projected, depending on the final share price.

The final number of shares being sold will also be set at the time of the final pricing.

A total of $20 million of shares are being sold direct to the public and employees, rather than through brokers, and preference shareholders also have access to that pool.