Kearns in bakery control

Press, 6 July 1988, Page 35

Kearns in bakery control

Kearns Corporation, the Christchurch-based financial services company, has bought a 59 per cent stake in Laurensons Bakery, of Dunedin. The company is also standing in the market for up to 200,000 Laurensons shares at 40c a share. The price paid for the 59 per cent stake, which was bought from Armada Holdings, was 60c a share.

The. acquisition of the 949,000 Laurensons shares was by way of cash, and the issue of 132,000 Kearns share to Armada at 180 c each (the last market price for Kearns was 210 c a share). The managing director of Kearns, Mr Peter Roberts, said the stand in the market at 40c a share would provide a market where any minority shareholders could realise their holdings immediately for cash.

“We are sure that when we are in a position to fully disclose our plans to Laurenson’s shareholders for the future of the company, we will continue to enjoy their support.” Laurenson is virtually a cashed-up shell company, as a consequence of the sale of most of its trading activities last year. Its major assets now comprise interest-bearing loans. For the six months ended January 31, Laurensons had a loss of $581,000. Shareholders were advised in February that more losses could be expected. As at April 30 shareholders funds were $630,000, representing 39c a share.

The directors of Kearns said it was their intention to restructure Laurensons and make the company a viable, profitable finance house. Kearns would have

a “subtantial minority interest” in the restructured company. “Given the economic environment and the appropriate capital structure, we believe there is scope to reconstruct Laurensons into a listed finance house, operating aggressively but conservatively in the Otago-South-land region,” Mr Roberts said.

The managing director of Armada, Queenstown businessman Mr Jim Boult, said Laurensons had been sold because it was no longer compatible with Armada’s future strategies. Mr Boult will, however, maintain a personal shareholding in Laurensons, and will remain a director. Mr Boult said the sale to Kearns was at a substantial premium over Laurensons current market price. This reflected

the strategic nature of the parcel, he said.

The sale of Laurensons leaves Armada with its tourist activities in Queenstown (Shotover Jet, Underwater World, and Cattledrome), a 50 per cent interest in Complete Finance, a joint venture financing operation with Baycorp Holdings, and a 67 per cent stake in knitwear manufacturer, Box Holdings. In March this year Armada and Newmans announced that Newmans would be buying a controlling interest in Armada. The deal was subsequently abandoned leaving Mr Boult with a 92 per cent stake in Armada. Mr Boult said all Armada’s activities were performing satisfactorily. In view of this, an outside shareholding was not a priority, although options in this regard would continue to be considered.