Viking Pacific sale another milestone in Skellerup history

By PAUL PANCKHURST

Investment bank JBWere's private equity fund has paid more than $45 million for the remains of the old Skellerup business empire.

The bank said the purchase of seven companies from Viking Pacific Holdings went unconditional yesterday, with settlement due next Friday.

The companies represent a rich lode of New Zealand manufacturing history.

JBWere said the biggest of the companies was Masport, the lawnmower and home heating firm, and Paykel, an engineering equipment distributor.

The sale represents stage two of Wall St investment bank Goldman Sachs' exit after its unhappy foray into New Zealand.

Stage one was the float in June of Skellmax, an amalgamation of rubber maker Skellerup and pump maker Flomax.

Shareholders of Viking Pacific Holdings approved the sale at a special meeting yesterday.

Viking chairman Arthur Young said the price was more than $45 million. JBWere's Private Equity No.1 Fund is a $22 million fund.

JBWere's head of private equity, Paul Chrystall, said the purchase was largely funded by bank debt.

The other five companies are Masport Foundries, New Zealand Insulators, Pacific Wallcoverings, A&G Price and RH Freeman & Co.

Young said Goldman Sachs owned more than 80 per cent of Viking Pacific Holdings. The balance was held by investors including institutions and members of the public who formerly held Skellerup bonds.

While the sale disposes of the last of the company's assets, the money will not immediately flow through to shareholders. Young said the company had to retain "substantial funds" until the end of next year to cover commitments from the Skellmax float.

Some of the money will pay off bank debt - $22 million last month.

George Skellerup opened a Para Rubber store in Christchurch in 1910 to launch the empire. Skellerup Industries listed on the Stock Exchange in 1947.

Brierley Investments took a 30 per cent stake in 1986 and moved to 100 per cent the next year. The Skellerup name reappeared in 1993, when BIL floated the company as one of the "baby Brierleys".

It was a conglomerate that included Skellerup, Cable Price Downer, Masport, Morrison-PIM, and Lanes, and later acquired Levene.

In 1995, chief executive Murray Bolton led the leveraged buy-out that relied on Goldman Sachs' deep pockets - and a mountain of debt.

The venture struggled, Levene went under, and the value of the $77 million of Skellerup bonds that had been sold to the public plunged.

Bolton left, Goldman Sachs took control, and in mid-1998 the group was restructured, with most of the assets transferred to Viking Pacific.