Life Pharmacy defends share sale price

Life Pharmacy plans to open more stores and diversify formats. Picture / Brett Phibbs

Life Pharmacy directors yesterday defended themselves against accusations they had sold stock too cheaply to a new investor and diluted existing shareholders' stakes.

Shareholder Ian Frame, chief executive of Wellington-based investor Rangatira, complained at the annual meeting in Auckland that a $2.275 million issue of 2.88 million shares at 79c a share to a private investor this month did not represent fair value.

Frame said Life, owner of the Life Pharmacy brand and a 49 per cent stake in 16 Life Pharmacy stores, had sold too cheap and was aggrieved it had diluted the value of his shares bought for $1.30.

"Fifteen months later the same directors have deemed those shares worth 75 cents," he said.

This month, Life agreed to issue the shares to pharmacist Warren Flaunty to bolster its coffers for acquisitions.

Chief executive Tim Roper said 79c was deemed fair by the board, based on the average trading price of the shares in the 90 days prior to the issue.

The issue also helped Life comply with shareholder-spread requirements of NZX listing rules, requiring that public shareholders hold at least 25 per cent of total shares.

The issue helped Life reduce its stake from 88 per cent to 79 per cent. It has until September 11 to meet the 75 per cent threshold.

Chairwoman Liz Coutts said the year had seen the company put in place the building blocks for significant future growth.

"I believe Life Pharmacy today is on the threshold of an exciting new era, one which will see our company take an even more important role within the beauty, health and wellbeing markets in New Zealand."

It was premature to give profit forecasts because of the seasonal nature of trading, centred around Christmas, and planned acquisitions, she said.

Life wanted to increase the number of pharmacies and diversify into other pharmacy formats.

Its current, full-service Life Pharmacy model was limited to 30 to 35 stores in New Zealand, Roper said.

A new format Metro store would open in Lambton Quay, Wellington, by September, with an agreement to buy 49 per cent of the shares in a company that owned a pharmacy there.

Roper said it was better for the company to grow slowly and through greenfields sites such as Sylvia Park and the Westfield shopping centre at Albany and potentially, Britomart, rather than "knocking on the door" of existing pharmacies.

Shares in Life Pharmacy closed unchanged at 85c yesterday.