Ann: MERGER: THL: Merger of thl's NZ rentals

• Release Date: 03/09/12 11:00
• Summary: MERGER: THL: Merger of thl's NZ rentals business with KEA and United
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THL
03/09/2012 09:00
MERGER

REL: 0900 HRS Tourism Holdings Limited

MERGER: THL: Merger of thl's NZ rentals business with KEA and United

3 September 2012

Tourism Holdings Limited
NZX & Media Release

thl TO MERGE ITS NEW ZEALAND RENTALS BUSINESS WITH
KEA CAMPERS AND UNITED CAMPERVANS;
CREATES STRONG NEW ZEALAND TOURISM ADVOCATE

Highlights:
o $69.5m merger of thl's New Zealand rentals business with two high-quality
New Zealand tourism businesses: United Campervans and KEA Campers
o Positive highly-deliverable financial benefits:
o Accretive to cash flow per share (CPS)  and earnings per share (EPS) in the
first year excluding acquisition and implementation costs and substantially
in the second year on synergies alone
o Sound post-acquisition capital structure; $19m of acquisition and $22m of
existing debt repaid in the eight months to 30 June 2013
o Optimises thl's highly-competitive international sales and service
infrastructure
o Creates  strong advocate for New Zealand tourism in high value European and
UK markets
o Logical, strategic and the best response to industry dynamics
o Kay Howe (United Principal) proposed to join the thl board
o Grant Brady (KEA Principal) will continue as Managing Director and 50%
shareholder of RV Manufacturing Group LP (RVMG) joint venture and proposed to
lead thl's NZ vehicle sales division.
Leading New Zealand tourism operator thl today announced a $69.5m transaction
to merge the New Zealand rentals business with KEA Campers and United
Campervans.
The transaction, which is subject to the approval of a simple majority (50%)
of thl shareholders and bank finance, will lift thl's assets to nearly $350m.

The consideration paid to KEA Campers and United Campervans includes
refinancing of $50.9m debt, the issue of 12m thl shares at $0.619 per share
and cash of $3.2m.  A deferred payment of up to $8.0m is contingent on
vehicle selling prices meeting expectations.

thl Chairman Keith Smith said: "This merger is logical, strategic and the
best response to the challenging realities of the current New Zealand
market."
 "thl is the industry player that already has the scale to market New Zealand
tourism and New Zealand campervan vacations to a broad international audience
and therefore the best placed to make the most of the additional brands".
The merger is also highly value accretive for thl shareholders. In the year
to 30 June 2013 following the merger, thl forecasts its operating profit
(earnings before interest and tax) to rise to $19.3m from $16.3m in FY2012.
This includes acquisition and implementation costs of $1.7m.  After-tax
earnings per share rise to 6.1 cents from 4.6 cents for continuing
businesses.
In the year to 30 June 2014, the first full year following the merger,
operating earnings are forecast to rise to $28.8m, while after-tax earnings
per share are forecast to rise to 13.3 cents per share, more than twice the
level of FY2013.
 thl will retain its strong balance sheet. Gearing as measured by interest
bearing debt to debt plus equity falls from 50% post the merger to 42% in the
first year and 39% in the second year as a planned fleet reduction programme
progresses. This level of gearing is well within thl's debt carrying
capacity.
 In addition the deferred consideration of $8.0m is linked to the realisation
prices of campervan assets and is designed to protect the value to thl
shareholders.
As a result of the merger debt reduction of $19m is expected to be released
in the first eight months following the merger.  This is in addition to $22m
of debt reduction already forecast by thl to be released.
thl Group Chief Executive Grant Webster said: "the merger is an appropriate
response to the challenging macro-economic factors facing New Zealand tourism
and the campervan industry".
"Following the merger, the volume of campervans that we sell is targeted to
remain at the same level at which the merger partners have sold vehicles over
the last two years."  Mr Webster said.
It is proposed, following the merger, that United Campervans principal Kay
Howe will join the thl board, initially as an Executive Director to assist
with the integration. KEA Campers principal Grant Brady who is a 50%
shareholder in RVMG will continue to lead the RVMG campervan manufacturing
business. It is also proposed that he will lead thl's New Zealand vehicle
sales operations, two critical components to the rentals business model.

Ms Howe and Mr Brady post completion will each represent circa 5% of the
ordinary shares in thl.  These shares will remain in escrow for six months.
They will be eligible for release periodically over the subsequent 12 months.

Kay Howe said: "I am delighted to have the chance to join the thl board at
such a critical point in its history. thl, combined with United and KEA, has
a great future and will be a powerful advocate for New Zealand tourism
particularly in high-value international markets such as the United Kingdom
and Europe ."
Grant Brady said: "I am looking forward to the opportunity to focus on my
core capabilities of vehicle construction management at the RVMG
manufacturing operations and leading the New Zealand vehicle sales business.
KEA has grown to the point where it fits comfortably and can prosper within
the thl stable. KEA, United and thl have a great future together."
As the transaction represents more than 50% of thl's current market
capitalisation, it will be subject to the approval of a simple majority of
shareholders at a special meeting to be held in Auckland during October.
 thl has commissioned Cameron Partners Limited to complete an independent
report for shareholders on the merits of the proposal. Cameron Partners'
report and a Notice of a Special Meeting will be sent to shareholders during
September. The merger is scheduled for completion on 31st October, 2012.
An investor presentation is available on the thl's website -
www.thlonline.com
Authorised by:

Keith Smith
Chairman
Tourism Holdings Limited

For further information contact:
Grant Webster
thl Chief Executive
Direct Dial: +64 9 336 4255
Mobile: +64 21 449 210

Ian Lewington
thl Chief Financial Officer
Direct Dial: +64 9 336 4212
Mobile: +64 21 952 254

About thl: (www.thlonline.com)
thl is New Zealand's premier tourism company. We are listed on the NZX and
are the largest provider of holiday vehicles for rent and sale in Australia
and New Zealand under the Maui, Britz, Mighty, KEA Australia and Motek
Vehicle Sales brands. In the USA we own and operate the Road Bear RV Rentals
& Sales brand. Within New Zealand we operate Kiwi Experience and the Discover
Waitomo Group which includes Waitomo Glowworm Caves, Ruakuri Cave, Aranui
Cave and The Legendary Black Water Rafting Co. In 2012 thl entered in a joint
venture to form RV Manufacturing Group LP, New Zealand's largest campervan
and specialist vehicle manufacturer based in Auckland and Hamilton.
End CA:00226796 For:THL    Type:MERGER     Time:2012-09-03 09:00:00