Comvita takes on debt for bigger stake in US partner

NZAX-listed health products maker Comvita has taken on more debt to buy an extra US$1 million ($1.6 million) stake in American partner Derma Sciences.

The money will be used to support Derma's US$6.5 million purchase of Western Medical, a United States-based maker and marketer of medical textile dressing.

The latest equity stake with attached warrants could take Comvita's stake in Derma to 10 per cent.

Comvita chief executive Brett Hewlett said the company was comfortable with the increase in debt although it might raise additional capital to "correct things" at some stage. He said the company had said it planned to grow through acquisitions.

"We'll do that through whatever's right at the time. If we can manage it through debt or equity, we'll do either one."

Hewlett did not expect the borrowing to affect earnings this year and noted the lower dollar was a bonus.

"Any impact of additional interest that we might have to pay due to that loan would hopefully be well offset by any forex gains that we get."

Hewlett also stressed that Comvita's application to register the name manuka in the European Union was not aimed at stopping any other NZ-owned manuka honey product brands from selling in the EU.

The application followed the discovery that manuka had been registered by foreign and New Zealand interests in other parts of the world. That included major Asian markets, North America and Britain.

Intellectual property lawyer Sue Irwin Ironside said manuka would be hard to protect in New Zealand because it was in general use but that was not the case overseas.

NZ Honey Packers and Exporters Association chairman Allen McCaw said it was wise to protect the brand so New Zealand did not lose out to overseas interests. "As long as there are no restrictive practices that prevent any New Zealand honey company using the name manuka, we are comfortable."