Judge Corp, set for a ‘spectacular’ year

Press, 15 October 1986, Page 41

Judge Corp, set for a ‘spectacular’ year

Judge Corporation, Ltd, the former J. Mercer Industries, is set for a spectacular performance in the current year, the chairman, Mr Bruce Judge, told the annual meeting. The N.Z. Stock exchange has approved the articles of association, and the company will be listed very soon. Mr Judge foreshadowed a profit of at least $4O million this year. After a recent placement at 600 c a share, and a complete restructuring of Mercers, Judge Corporation has an issued capital of $44 million in 50c shares. The shares have been changing hands in Wellington at 600 c ex bonus At the latest balance date, June 30, Mercers had a share portfolio of $122 million, with a potential profit of $9l million — most of it realised since and re-invested in Ariadne Australia, Ltd. Mr Judge intends to use Judge Corporation, in

which his personal investments are consolidated, as the vehicle for a foray into Ariadne, with the ultimate aim of obtaining effective control of the Australia-based company. The reason for using Judge Corporation was to create a better gearing — ability to borrow — to get his controling interest in Ariadne, Mr Judge said. He said that Ariadne shares were too cheap, and the company very ‘ vulnerable to a take-over bid. It was therefore necessary to more before others latched on to the idea. Mr Judge told the meeting that Ariadne had a turnover of more than sAust 3 million from its industrial operations, with financial operations adding a further $2 million. Further expansion in Australia is planned, and the take-over of KDI Coporation, in the U.S. achieved through Impala Pacific, is extremely

promising because of its substanial business with the US Defence Department.

KDI Corporation had been a takeover target for years and with its other big business in swimming pools and equipment it could be turned into a very profitable operation. Profit projections for Ariadne in the current year range from sAustlOO million to $135 million. With about 20 per cent of this to be equity accounted plus profits on its property holdings and international wheeling and dealing, Mr Judge is quite confident that the s4om profit prediction for Judge Corp is quite sustainable. Although the company will not operate in competition with either Ariadne or Renouf Corp, it was likely to work in with them in a supporting role as the need arose with its low gearing enabling to put big credit lines in place for substantial short-term deals.

At 600 c and a profit of $4O million, the priceearnings ratio would be 13.2, and a $5O million profit would give a P/E ratio of 10.7. After recent buying, in Ariadne Judge Corp (including Mr Judge’s own holding) has about 17 per cent of the Ariadne capital and will move to 20 per cent as fast as possible. After that it is a matter of going up in 3 per cent steps every six months under the Australian regulations until the desired level is reached. Judge Corporation will be headquartered in Christchurch. The company is in the process of purchasing Victoria Towers, the 10-storey block being built by Mr J. W. Butterfield on the corner of Oxford Terrace and Armagh Street.