Healthcare sale will benefit shareholders and cut debt

By PAUL PANCKHURST

Fisher & Paykel Appliances will pocket a minimum of $230 million after selling out as the cornerstone shareholder of sister company Fisher & Paykel Healthcare.

The company plans to return $140 million to shareholders - about $55 million through a 21c per share dividend and about $85 million through an on-market share buyback.

That will leave $90 million or more for cutting debt, which rose through last year's $189 million purchase of the finance book of the Farmers retail chain, merged with the company's own finance business.

The New Zealand and Australian Stock Exchanges halted trading in the stock yesterday afternoon as investment bank UBS began a "book build" to sell the stake to a spread of investors.

The "floor" price was $11.65 a share - a discount of 5.7 per cent on the last trading price - and the book build is underwritten, guaranteeing the company at least $230 million.

Some analysts speculated that the timing could reflect a perception that F&P Healthcare will face some pressure from currency issues.

F&P Appliances' balance sheet is robust - so it was not under pressure to cut debt.

Managing director John Bongard said the move would give the company "further financial flexibility" as it kept growing overseas.

He described the sale as driven by Appliances' own circumstances, rather than speculation of what the future held for Healthcare.

Bongard talked in terms of the five- to 10-year outlook for the appliance and finance businesses.

The company has increased its spending this year on production capacity and analysts say much more could be on the way.

The sale is a final parting of the ways for the two companies, split from Fisher & Paykel Industries in 2001.

"It's a natural progression," said one fund manager. "There's no connection between the two apart from name now."

F&P Healthcare's share register is now wide open.

"It is potentially a takeover target," said Macquarie investment director Arthur Lim.

F&P Appliances says it expects to announce the outcome of the sale on Monday.

The fully imputed special dividend will be paid to shareholders on the register on March 19.

* F&P Healthcare said yesterday it was considering a share split.