KEY POINTS:
Listed hire company Hirequip said it has agreed to sell its equipment hire business to PES Finance for $165 million.
The sale is conditional and the price could rise by $7.5 million if earnings in the year to June 30, 2007 are high enough.
PES is a subsidiary of Pacific Equipment Solutions, which is a company associated with Nikko Principal Investments of Japan.
Approval from Hirequip shareholders will be sought at a meeting in Dunedin on December 18.
Directors support the sale and intend to vote shares under their control in favour of the plan.
At the same meeting shareholders will be asked to authorise the sale of the rest of Hirequip's assets.
In August, Hirequip signalled it wanted to sell its hire equipment business and was likely to return the money to shareholders.
The sale, to capitalise on interest in the hire sector, leaves the company with interests in property, biotechnology companies and Tasman Farms.
Shareholders include founder Stuart McKinlay with about 25 per cent, and chairman Graeme Wong with 6.7 per cent.
Mr Wong said today that the sale price was a fair market price and was achieved after a competitive tender process conducted by First NZ Capital.
The extra payment, or earn out, kicks in if earnings before interest tax and amortisation are between $16.7 million and $18.56m and is apportioned on a straight line basis.
Mr Wong said it was relevant to note that in the first four months of the current financial year revenue and earnings before interest and tax did not achieve budget but the board was confident that the remainder of the year would provide substantial opportunities to achieve at least some of the earn-out available.
The sale is conditional on approval by the board and investment committee of Nikko Principal Investments Japan on or before December 12.
It also needs Overseas Investment Office approval and shareholder approval. There is also a no adverse material change clause.
- NZPA
