KEY POINTS:
Two Southern Capital directors have made a $100 million takeover offer for the company, which was formerly known as Hirequip.
Lynwalsh is offering $1.197 a share which follows a $1.115 a share buy-back package announced by Southern Capital this month. The buy-back sought to net 14.75 per cent of the company's shares.
Shares in Lynwalsh Holdings are beneficially held on behalf of trusts associated with Dunedin businessmen Stuart McKinlay and Trevor Scott, which currently own more than 29 per cent of Southern Capital.
Southern Capital recently sold its Dunedin-based hire business to Australian-based PES Finance for $168 million and plans to sell its remaining assets.
Scott, a director of both Southern Capital and Lynwalsh, said his offer was not competing with Southern Capital, but was designed to eliminate the cost of running a public company while legacy assets were sold.
That could take 18 months to two years during which there would be a need for head-office infrastructure.
If Southern Capital succeeded in buying 14.75 per cent of the shares, Lynwalsh would have to pay about $100 million for the balance of shares. If the Southern Capital buy-back did not succeed, it would cost about $117 million.
He said the offer gave shareholders certainty as it represented a certain cash payout now rather than some time in the future.
Southern Capital was in the process of selling its remaining assets with a view to liquidating the company and making progressive payouts to shareholders. There were no guarantees as to what shareholders would receive, he said.
The legacy assets include 42.2 per cent of the Omaha Beach property development north of Auckland, the sale of which is in the process of being settled; the Clifford Bay Marine Farms in Marlborough, the future of which is subject to a scientific study on its impact on Hector's dolphin; stakes in three Dunedin biotechnology firms and some other property.
Late last year, Southern Capital received $14 million from the sale of Pegasus Bay Town near Christchurch, with an initial distribution of 90c a share paid to shareholders over Christmas. It has also recently sold a 21.75 per cent stake in Australian dairy farmer Tasman Farms.
Scott said that if Lynwalsh succeeded, Southern Capital would be delisted from the NZX and the sale of assets would continue, although there was some risk selling assets such as shares in the poor performing public biotechnology companies which could devalue them further, he said.
* The offer is to be distributed to shareholders on February 28 and remain open until March 30.
- OTAGO DAILY TIMES
