Good Spirits’ portfolio includes The Fox, Botany Commons, Danny Doolan’s (pictured), Union Post, Cock & Bull, Citizen Park and The Cav. Photo / Hayden Woodward
Listed pub owner Good Spirits Hospitality is a step closer to selling its trading assets after buying more time with its lender Nomura.
The question now is who will buy the company’s assets, which include The Better Bar Company and its portfolio of pubs in Auckland and Hamilton?
Good Spirits (GSH) this week obtained an NZX listing rule waiver, allowing it to further amend its $27.4 million loan facility with Nomura subsidiary Pacific Dawn - a related party through a 24.99 per cent shareholding in Good Spirits - without the need for shareholder approval.
It has now extended the facility for 30 days after stage two due diligence commenced, which Good Spirits says is “progressing well”.
“GSH is currently in discussions with a number of potential purchasers and expects to receive final bids shortly,” it said on Tuesday.
Stock Takes understands a leading contender in the process is Australian Venue Co (AVC), a private equity-owned hospitality business based in Melbourne.
AVC operates more than 200 venues throughout Australia and is owned by Kohlberg Kravis Roberts, although other private equity firms are said to have been in acquisition talks recently.
AVC, run by former Spotless executive Paul Waterson, has an existing presence in New Zealand with a subsidiary operating nine pubs in Wellington (including The Old Bailey and The Realm) and two in Auckland (Saint Alice and Dr Rudi’s).
A spokesperson for AVC declined to comment.
Another who has been named by sources as a potential bidder is Nourish Group founder Richard Sigley, who had previously sold some of his restaurants to Good Spirits and later tried to push through a merger between Nourish and Good Spirits that fell through in 2021.
Sigley did not respond to Stock Takes’ enquiries.
Good Spirits’ portfolio includes The Fox, Botany Commons, Danny Doolan’s, Union Post, Cock & Bull, Citizen Park and The Cav.
The company put the bars up for sale in December following a torrid few years for the industry.
But they remained profitable, with revenue from the venues expected to be around $25.5m for the June 2023 financial year.
Failure by MP Michael Wood to declare his share investments saw him resign as a minister this week, but a closer look at his holdings has revealed a mixed bag of performance for the companies he invested in.
Wood initially got in trouble for not declaring his Auckland Airport shares, despite being warned 12 times to sell them - prompting the loss of his Transport portfolio. He finally sold them this month and donated the proceeds to charity.
It is not known exactly when he received the Auckland Airport shares, but they were floated in 1998 at $1.80 and were trading around $8.58 on June 7 when he is said to have finally exited them.
In terms of his other investments, exactly when he acquired them has not yet been declared. But looking at their performance so far this year shows they have not been star performers of late.
Chorus has had an okay run this year, but both Spark and National Australia Bank are down. Chorus shares traded at $8.29 at the start of the year and opened on Wednesday at $8.54.
Meanwhile, Spark shares began the year at $5.34 and have traded down, opening at $5.14 on Wednesday. And ASX-listed National Australia Bank shares kicked off the year trading at A$29.34 and closed on Tuesday at A$26.50.
Channel Infrastructure has performed well since its transition from Refining NZ and the Marsden Point oil refinery to a fuel import terminal and storage facility.
However, there has been some mixed news since the company reported its full-year result in February.
Having hit a low of 41 cents in March 2021, the share price has climbed to above $1.40, and after returning to profitability last year, Channel was able to resume dividend payments with a modest 7c per share paid on March 20 this year.
Following the conversion to an import terminal, crude oil imports have been replaced by imported refined fuel products, which now come from a range of refineries in the Asia-Pacific region.
The company is the only supply route for jet fuel directly to Auckland International Airport, which consumes 80 per cent of New Zealand’s jet fuel demand.
It has long-term customer contracts with a fixed variable fee structure.
Channel’s terminal services and private storage fees are subject to the Producers Price Index (PPI), which has benefited the company in an inflationary environment.
However, the uplift in pricing has softened recently - something Forsyth Barr analyst Andrew Harvey-Green picked up on in a note to clients last week.
He noted that the March quarter PPI, at plus 5.3 per cent, was down 2.4 percentage points from the December 2022 quarter - falling faster than expected and at a greater rate than the consumers price index (CPI) decline of 0.5 points in the same period.
In addition, the Reserve Bank is forecasting further falls in the CPI over the coming six months.
Harvey-Green says this has the potential to reduce Channel’s 2024 earnings by around 3 per cent, based on a revised PPI uplift assumption of 3.5 per cent, and all else being equal.
The good news is that jet fuel volumes are recovering and Auckland Airport is confident of a return to near-normal passenger numbers by the end of the year, he says, leading to a 1.5 per cent increase in Forsyth Barr’s forecast volume for 2024.
Putting the two together, though, the net change to forecasts is still negative.
Harvey-Green has pulled back his medium-term ebitda forecast by 2 per cent. Forsyth Barr has reduced its target price by 4 cents per share to $1.55 and lowered its rating to Neutral from Outperform.
Harvey-Green also notes that Channel remains well-placed to provide a significant proportion of the additional storage needed for the Government’s procurement of 70 million litres of diesel storage.
Hobson Wealth chief operating officer Anna Scott has been appointed chief executive of the NZX’s exchange-traded funds arm, Smartshares, the exchange says.
NZX chief executive Mark Peterson said Scott will take up the role at Smartshares from September 4 and will be based in Auckland.
Her appointment follows the announcement this year of Hugh Stevens’ resignation.
Smartshares has $10.5 billion in funds under management, with customers ranging from individual investors, businesses and iwi to international community groups in the Pacific.
Scott started with Hobson Wealth in 2016, advising on business transformation. She has more than 20 years’ market experience, having held roles in programme and business management in London, Kuala Lumpur and Auckland, the NZX said.
Meanwhile, Hobson Wealth - previously Macquarie Group’s New Zealand arm - poured cold water on a report in The Australian that it had been approaching Australian firms to test their interest in an acquisition of the company.
“I can unequivocally and categorically deny that report,” Hobson chief executive Warren Couillault told BusinessDesk.
Apple grower and pet food company Scales’ current share price suggests investors have a “free option” to gain exposure to a recovery in horticulture, Forsyth Barr says.
The broker says the likelihood of material permanent damage from Cyclone Gabrielle to orchard trees had reduced, relative to its previous expectations, and tailwinds in the pet food industry should partially offset most margin pressures.
Operating drivers have become more complicated with new ventures and the nature of contracts in global proteins, and this was likely to continue as Scales had dry powder for further acquisitions.
Forsyth Barr said Scales’ track record of robust return on capital provided confidence in management’s “execution capability”.
Investors who are able to look through short-term volatility have the opportunity to own a well-run diversified agribusiness at an undemanding multiple, it said.
”We reinstate full coverage with a $3.90 target price and an ‘outperform’ rating,” the broker said. Scales shares currently trade around $3.12.
Duncan Bridgeman is managing editor of NZME Business, including the Business Herald and BusinessDesk. He joined the Herald in 2018. Disclaimer: Duncan Bridgeman owns a small number of shares in Channel Infrastructure.
- Additional reporting by Jamie Gray
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