Just Jeans mystifies market

By PAUL PANCKHURST

New Zealand sharemarket watchers were puzzled yesterday by the Just Jeans company's explanation for listing solely on the Australian stock exchange.

The company - now known as Just Group - said it canned a possible NZX listing because it would have fallen just outside the NZSX50 index.

The company will raise A$530 million ($606 million) if the float is at the maximum retail price of A$2.60 per share.

Just Group operates the Just Jeans, Jay Jays, Portmans and Jacqui E brands, with 574 stores in Australia and 102 in New Zealand.

Chief financial officer Jason Murray said that Just Group did not want to be "an off-index stock in New Zealand and a significant stock in Australia".

He said it would have been excluded from the NZSX50 because the percentage of the company's turnover in New Zealand was too low.

Murray later said the index issue had been "a critical part" of deciding whether to list here.

Local sharemarket watchers - such as institutional investors - could not understand that.

However, they acknowledged a listing could be a marginal call for a company whose shares would mostly be held and traded in Australia.

Stock exchange chief executive Mark Weldon said NZX was trying to make the sharemarket as attractive as possible for overseas companies but "we can't control the decisions companies make".

Just Group's 87.1 per cent owner, private equity group Catalyst Investment Management, is exiting from the company.

Senior executives are selling down from 12.9 per cent to 6.5 per cent.

Goldman Sachs JBWere and Citigroup are the lead managers for the float.

The Catalyst-backed management buyout of the company in 2001 valued Just Jeans at A$130 million.

Just Group is forecasting earnings before interest, tax, depreciation and amortisation of A$87.7 million for the 2005 financial year on sales of A$655.1 million. The forecast price/earnings ratio is from 10.9 to 13.

Just Group describes the youth-targeted Jay Jays and womenswear chain Portmans - acquired in June 2002 - as the immediate big growth prospects.

Most of the company's capital for expansion is going into those two.

Managing director Howard McDonald told a media briefing in Melbourne that the eight Portmans stores in New Zealand could swell to three times that number.

Just Jeans and Jacqui E are classed as the company's established "cash generators".

Urban Brands and Peter Alexander are intended to provide future growth opportunities.

The share offer will be priced at between A$2.25 and A$2.70 per share in a "bookbuild" by institutional investors on May 4 and 5. The retail offer will run from April 5 to April 30.

An investment statement is being registered in New Zealand for the offer.

One difference between New Zealand and Australian investors: tax implications.

While Australian investors will receive fully franked dividends, Just Group says it will impute dividends for New Zealand investors "to the extent it is possible".

Just Group's market capitalisation will be in the range of A$491 million to A$589 million - with the listing due on May 7.

The details

* Stake offered in Just Group: 93.5 per cent

* Cash sought through offer: up to A$530 million

* Forecast sales: A$655.1 million

* Forecast earnings: A$87.7 million

* Forecast P/E: 10.9-13.0

* Forecast market cap: A$491 million-A$589 million

* ASX listing due on May 7