Hooks baited for Sealord

By GEOFF SENESCALL

The Treaty of Waitangi Fisheries Commission is understood to have entered into an agreement with a South African company to bid for Brierley Investments' 50 per cent shareholding in Sealord.

Market sources indicated yesterday that an offer would be made to Brierley next week.

The South African party is thought to be that country's largest frozen food company, Irvin & Johnson.

Commission chief executive Robin Hapi said it was no secret that the commission - which already owns 50 per cent of Sealord and has pre-emptive rights over the Brierley stake - had been talking to various parties.

"As to offers and agreement and issues of that kind, no comment.

"The commission's objective throughout this process has been to add value to the company over the medium to long term and we are looking at options to achieve that."

Irvin & Johnson is understood to have originally bid for the whole Brierley stake.

However, the sale process was rocked at the 11th hour when the Government announced it was barring overseas bidders from owning more than 24.9 per cent of the Nelson-based fishing company.

Despite this setback, which effectively wiped value off the asset, Brierley signalled it was still keen to proceed with the sale.

Now any overseas party must find a local partner.

If the commission did not put up its hand, the most likely option would be to place shares among institutions.

The prospect of an imminent sale has been hinted at by Brierley, which has been visiting brokers in recent weeks.

It apparently believes it will get $190 million for its Sealord stake.

Given the Government's intervention, it is unlikely to achieve that price.

The commission is expected to dip into its cash reserves to pay for its share of the purchase.

Its balance sheet shows it has more than $60 million.

But though it has significant cash on board, the commission has looked at financing options.

Last month, a merchant banking firm was sounding out brokers on a $100 million capital notes issue on behalf of the commission.

It is unlikely to pursue this option.

Sealord is New Zealand's largest fishing company.

Though financial details of the asset have not been made public, Sealord is believed to have a debt load of around $200 million. Its average annual pre-tax profit over the last four years is about $14 million.

Sealord's corporate costs are thought to be $20 million.