By DITA DE BONI
Cold-drink maker Frucor Beverages has launched a prospectus to float 62.6 million shares, but says organic growth can be financed from existing cash flows.
Instead, proceeds from the sale of 50.1 per cent of the company will be used to pay out investors in Frucor's financial sponsor, Pacific Equity Partners (PEP).
The public offering is scheduled to close on June 8.
Assuming the total number of shares are sold at the mid-point of the indicative price range - between 195c and 225c - the newly floated Frucor will have a market capitalisation of $262.5 million.
Frucor was bought from the Apple and Pear Marketing Board in 1998 for $50 million by a consortium of investment bankers and private equity fund managers, Pacific Equity Funds. The company has since acquired the business of Pepsi-Cola Bottlers NZ for less than its estimated book value of $30 million.
Pacific Equity Funds is a Sydney private investment vehicle established by Bain Capital of the United States.
Bain and Pacific Equity have $A500 million ($630.4 million) earmarked for investment in Australasia, but have few significant investments outside Frucor.
Parties involved with both PEP and Bain Capital will be the largest shareholders in Frucor on completion of the offer with 37.6 per cent, assuming no exercise of the over-subscription option, which would take the float up to 60 per cent of the company.
Frucor managing director Mark Cowsill said the offer was extended to retail investors in both Australia and New Zealand, and institutional investors internationally.
Dual listing of the company is scheduled for June 13, with dividend payments first expected in March and September next year.
Between 1996 and 1999, pre-tax earnings increased 337 per cent, from $4.1 million to $17.9 million.
The forecast for the 2000 year is $31 million and for the next year, $42.5 million.
Leading revenues in the 2001 year will be so-called new-age beverages, including the energy drink "V."
Most of the company's growth is expected to come from the company's Australian market for "V," where the product has 60 per cent of the drinks market and is looking to six-fold sales expansion as the product category increases.
Frucor also markets Just Juice and Fresh-Up.
Frucor has pledged to plough more capital into the marketing of "V" in Australia, but will continue to export the product from the company's production line in South Auckland.
All the company's exported and domestic product comes from the newly renovated plant.
Mr Cowsill said organic growth was the priority for Frucor, with the company leveraging off a distribution agreement with Australian company Spring Valley Juices.
Spring Valley is Australia's largest single-serve brand of juice, accounting for one in every four bottles consumed there.
The company, a subsidiary of one of Australia's largest dairy producers, Bonlac Foods, delivers product to more than 15,000 outlets.
"We will be looking at using Spring Valley as a vehicle for expansion within Australia," Mr Cowsill said.
He said acquisitions had not been ruled out, but would not name any potential takeover targets. However, another company source later told the Business Herald that possible acquisitions could include Pepsi Australia, which Lion Nathan is looking to divest; Schweppes Australia, which Coca-Cola Amatil has been prevented from merging with by the Australian Competition and Consumer Commission; and Spring Valley itself.
He said there were other smaller Australian juice firms that would also fit into the Frucor portfolio.
Mr Cowsill said the company would continue to roll out "V" internationally - it has been introduced to South Africa and Britain - with two new markets being researched.
Analysts said the Frucor offering seemed fair.
But one said there was a feeling that investors did not need to consider new public offerings "when there are so many good deals on the market already."
"The company may also have yet to prove that this type of product [`V'] is not just a fad."