South Eastern Utilities eyes acquisitions

By Mark Reynolds

Cashed-up investment company South Eastern Utilities has targeted a couple of companies on which to spend a war chest of up to $130 million.

Chairman Norman Geary said the company was looking for a new business direction after selling most of its investments in the electricity industry over the past 12 months.

"We are pursuing a couple of things and are very actively involved in that," Mr Geary told the Business Herald. Mr Geary said the company intended to take a majority position in any acquisitions it made, "so that our people could work actively to bring out any hidden value".

He is hopeful the company will make a significant investment before the end of this year. South Eastern is in the market for a new business after selling out of its investment in Wairarapa Electricity for $99.2 million last year. After repayment of debt, the company has about $60 million of cash in the bank, along with a stake in electricity lines business Horizon. It will cash up most of that $8 million investment when a share buyback at Horizon goes ahead next month.

"With the cash in the bank and an ability to borrow on that at a gearing of about 50:50, we are in a good position to do something quite substantial," Mr Geary said.

"There are not a lot of ripe plums out there, but we have trawled the New Zealand and Australian investment opportunities and we are confident of making something happen," he said.

Mr Geary said South Eastern Utilities major shareholders had indicated they were supportive of the company making further investments, rather than simply returning cash back to its owners. It is majority-owned by Christchurch's Pyne Gould Guinness group, with the Rutherford family also having a substantial interest. "The shareholders have left us alone to look at options for the company," he added.

There was speculation earlier this month that South Eastern might make a move on Wrightson, which, like Pyne Gould Guinness, has stock and station agency investments. Mr Geary would not comment on this speculation, but market indications now are that South Eastern is interested in other areas.

Mr Geary said no particular industry was being targeted by South Eastern. "Really, what we are looking at is something where economic value has not been recognised. That does not restrict us."

He pointed out that under its former identity as Amuri Corporation, the company had moved in and out of investments including property and ports.

The company on Tuesday reported a bottomline profit of $21.6 million for its June financial year, up from $6 million a year earlier due to one-time gains on the asset sales. The company's shares closed at 91c yesterday, 16 per cent below the company's net tangible asset backing of $1.09 a share.