Veritas Investments eyes sale of Better Bar Co

Gastro-bar The Cav in Auckland is among the sites owned by The Better Bar Co. Picture / Doug Sherring

Veritas Investments is investigating a sale or merger of its profitable Better Bar Co as the NZX-listed firm seeks ways to repay lender ANZ Bank New Zealand.

The Auckland-based company has been granted three lifelines by its lender, which is owed almost $27 million as at December 31, as it sells assets to repay that debt.

It exited the unprofitable Nosh supermarkets last year and has a conditional agreement to sell the Mad Butcher franchisor to chief executive Michael Morton, with an independent adviser's report set to be mailed out to shareholders once a date for a special meeting has been set.

The $8m sale price for the Mad Butcher franchisor would generate a $5m accounting gain and go towards repaying ANZ, however it would be less than a quarter of the $40m price tag attached when Veritas bought the franchisor business in 2013, of which Morton received $20m in cash and $20m in shares.

A successful transaction would leave the Better Bar Co as the firm's remaining unit, and Veritas' directors are assessing a number of options "which may include the sale or merger" of the business, recapitalisation or refinancing of its lending arrangements, or a combination of those options, the company's first-half report said.

Net profit fell to $153,000, or 0.35c per share, in the six months ended December 31, from $1.2m, or 2.78c, a year earlier, with $750,000 of restructuring costs and $397,000 of losses on its discontinued Mad Butcher operations weighing on the bottom line.

Better Bar Co lifted earnings before interest, tax, depreciation and amortisation 1.9 per cent to $3.1m on an equivalent increase in revenue to $12.2m.

The shares last traded at 5c, valuing the company at $2.2m.