Hellaby sells Rodd & Gunn for $13.6m

Hellaby Holdings said it had conditionally agreed to sell its 82.5 per cent interest in the menswear retail chain Rodd & Gunn (R&G) for $13.6 million.

It will sell to interests associated with R&G's chief executive and 15 per cent shareholder, Michael Beagley.

Hellaby said it would book a profit of more than $6m on the sale.

Because of Mr Beagley's role as ceo of R&G and Hannahs, the proposed sale constitutes a material transaction with a related party and requires Hellaby shareholder approval under listing rules.

A shareholder meeting will be held in early June.

In a related transaction Hellaby Holdings has bought the 5 per cent shareholding in shoe retailer Hannahs owned by Mr Beagley for $2m and an 0.8 per cent shareholding held by another Hannahs employee so that Hannahs is now fully owned by Hellaby.

An independent appraisal report prepared by Grant Samuel concluded that the transactions were fair to Hellaby shareholders.

Hellaby managing director David Houldsworth noted the company had recently signalled it would be taking a number of measures to provide funding for future acquisitions and to strengthen the financial base to support future growth, including the sale of certain non-core investments.

"R&G operates in the very competitive upmarket menswear fashion sector which is highly susceptible to changing fashion trends and economic and retail cycles.

"In addition, Hellaby believes that after several years of growth through opening new stores in New Zealand and Australia, there are limited opportunities for future growth of the business."

When Hellaby bought R&G six years ago it was losing money.

Mr Houldsworth said the sale would improve the balance between Hellaby's industrial, automotive and retail investments.

Hellaby shars were up 4c to $4.54 in a strong market.

- NZPA