Hellaby has $80m war chest

David Houldsworth

Hellaby Holdings has nearly $80 million sloshing around in its coffers but managing director David Houldsworth says the company is in no hurry for a spend-up.

The company has been generally expected to go shopping with the shedding of "non core" businesses seen as preparation for a return to its more industrial origins.

In the past couple of months Hellaby has sold its stake in scouring company Wool Services and clothing chain Rodd & Gunn and raised $55 million through a capital notes issue.

Houldsworth said yesterday that, for now, its existing shoe businesses were a good retail fit, with its Hannahs, Number 1 Shoe Warehouse and Hush Puppy chain of footwear stores bringing in good returns. There were no plans to expand into other retail areas.

"But if the right opportunity comes along we will have a look at it."

The company draws its biggest profits from the automotive and industrial sectors where it owns Brake & Transmission New Zealand and Diesel Distributors.

Potential purchases were likely to be in these areas.

A history of buying and reviving "strugglers" could be something Hellaby will take advantage of as the economy softened, said Houldsworth. However it had seen no sign of a downturn in its shoe chains so far.

"But essentially we're looking for good businesses we can take to the next level."

The market was becoming more competitive with acquisitive Australian private equity companies on the prowl and Houldsworth said the company was cautious to make sure it bought right.

"We probably made a mistake when we bought the BBQ Factory and we've got to make sure we don't repeat that - that's not to say we don't think we can turn that around."

The business - which sells more spa pools than barbecues - was weather-dependent and the market for outdoor furniture more competitive than initially thought.

A write-down of goodwill for the BBQ Factory of up to $5 million will be made next week. But with location upgrades and the opening of the first megastore in Christchurch this month, Houldsworth was confident the company had turned a corner.

He ruled out buying in Australia, saying the risks were too great. Whatever the acquisition, he did not think it would hold any surprises or mark a radical change of direction for the company, which wanted to retain its high dividend payout.

Hellaby was not looking to raise more money in the short term, with Houldsworth comfortable spending up to the $80 million.

Shares in Hellaby Holdings closed down 7c at $4.96 last night.