Kirkcaldie owners OK David Jones takeover

Kirkcaldie and Stains department store, Wellington. Photo / NZPA

Kirkcaldie & Stains' shareholders have voted in favour of Australian department store chain David Jones taking over the upscale Wellington store, ending a run of 152 years, and will receive $19.4 million in a distribution.

At a special meeting in Wellington, shareholders voted in favour of two resolutions, with 99.25 per cent approving the sale to South Africa-owned David Jones and 95.61 per cent in favour of the company returning cash to them via a court approved scheme of arrangement.

Like many bricks-and-mortar stores, Kirkcaldie has been forced to discount stock to compete with online rivals, chairman Falcon Coulston told shareholders. Department stores in particular have come under pressure, including David Jones, which was taken over by South Africa's Woolworths Holdings and delisted from the ASX last year after sales and profitability fell. Kirkcaldie has been unprofitable for seven years.

David Jones will pay A$400,000 for the Kirkcaldie & Stains name and take over the lease of its store on Lambton Quay, Wellington, with the option to buy the retailer's assets for NZ$500,000 within 25 working days. The company's stock, valued at $8.3 million as at May 31, is not included in the sale and the company plans to sell any remaining stock from its Thorndon Quay furniture store after its flagship store closes in February.

The only outstanding condition now is the purchaser gaining consents from the Overseas Investment Office by November 30.

The New Zealand retailer had $18 million in cash and equivalents as at June 4 after selling its neighbouring Harbour City Centre building. The rest of the proceeds went toward paying off $23.5 million in bank debt. Kirkcaldie will receive a final $4.75 million instalment on the sale in October.

Kirkcaldie shares surged as high as $2.29 after the David Jones announcement on June 4 from $1.68 prior to the deal, having slumped to a record low $1.58 late last year. The stock last traded at $2.25, giving the company an implied market capitalisation of $23.1 million.