Freight firm seeks $30m

By DANIEL RIORDAN transport writer

Freightways Express is raising $30 million with a preference share issue, citing a need to reduce debt and position itself for further growth.

The company is issuing 25 million $1 preference shares and reserving the right to issue another five million shares at the same price.

The move matches one in 1997, when the company issued and listed $30 million of preference shares on the Stock Exchange concurrent with Australian courier company Ausdoc buying it off Tappenden Holdings, the investment vehicle of Auckland businessmen Alan Gibbs and Trevor Farmer.

All Freightways' 39 million ordinary shares are owned by Ausdoc.

Freightways has 1400 preference shareholders, almost all of them New Zealanders, with no voting rights.

The new preference shares carry a dividend of 11.08 per cent, payable at the end of October, and after that an annual rate 4.5 per cent above one-year Government stock. They are expected to list on May 14.

The minimum application is $2500 and the initial $25 million is underwritten by Forsyth Barr Group.

Freightways will use the money to trim its debt of $72 million, incurred largely through the November 1999 purchase of air linehaul operator Fieldair Holdings and the building of new premises in Auckland and Wellington to handle a raft of acquisitions in the last few years.

Finance director Mark Royle said the money raised would reduce the company's debt-equity ratio from 2:1 to 1:1.

Freightways' businesses include courier brands NZ Couriers, Post Haste Couriers and Sub60, mail operation DX Mail and records management and contract distribution arms.

The company recently launched a new e-commerce business, Fetch, and employs 950 fulltime and 220 part-time staff, as well as using 900 independent contractors.

In the year to last June, it made a net profit of $7.2 million on revenue of $164 million. In the half-year to December, net profit was $4.7 million on revenue of $89 million.

Trading since then had been strong in all divisions, said managing director Dean Bracewell.

The company had several ideas for new acquisitions, but nothing in the pipeline, he said.

Freightways' businesses had grown at an average of close to 10 per cent in the past 12 months - some of them admittedly from low bases - and Mr Bracewell said this was particularly pleasing in light of the flat economy.

He said Ausdoc had no plans to float off any part of Freightways.