NPX
22/10/2014 09:05
ASSET
REL: 0905 HRS Nuplex Industries Limited
ASSET: NPX: Sale of Agency & Distribution Business and Masterbatch Bus.
NZX/ASX release 22 October 2014
Nuplex to sell agency & distribution and
masterbatch businesses for A$127.5 million
- Nuplex agrees to sell its agency & distribution business, Nuplex
Specialties, and its plastic additives business, Nuplex Masterbatch, to Axieo
Pty Limited a newly created company that has been formed with support from
funds advised by CHAMP Private Equity.
- Under the ownership of Axieo, the Board believes Nuplex Specialties and
Nuplex Masterbatch will be well placed to grow into the future.
- Nuplex to be a dedicated global resins supplier with leading market
positions in its selected product segments and a growing presence in emerging
markets.
Nuplex Industries (NPX) today announced it has agreed to sell its agency &
distribution business, Nuplex Specialties, and its plastic additives
business, Nuplex Masterbatch, to Axieo Pty Limited, a newly created company
that has been formed with support from funds advised by CHAMP Private Equity
(CHAMP) for A$127.5 million.
Nuplex Chairman Peter Springford said whilst Nuplex Specialties has delivered
attractive returns in the past, it and Nuplex Masterbatch are non-core to
Nuplex's global strategy.
''The Board was not actively seeking to divest these businesses, however they
have become increasingly non-core to the Company's strategy as the resins
business has continued to grow. When the offer was received from CHAMP, we
undertook a careful evaluation of the medium term outlook for both
businesses, and in the context of Nuplex's strategy, we assessed the return
they could deliver shareholders as part of our portfolio relative to the
offer price."
"Following this review, the Board concluded that the negotiated price was an
attractive one and the offer was in the best long-term interests of
shareholders and the Company. The offer delivers a premium for these two
principally Australian and New Zealand focused businesses as stand-alone
entities and the divestment is in line with Nuplex's strategy to focus on the
global resins business."
Nuplex CEO Emery Severin said: "This is an important milestone in our
commitment to maximising shareholder returns by focusing on the markets and
products which will deliver earnings growth over the short to medium term.
Selling Nuplex Specialties and Nuplex Masterbatch realises the value of these
non-core businesses and allows us to focus on the global resins business on
which our long term strategy to grow earnings and improve returns to
shareholders is centered. Through its world-wide reach, expert R&D
capabilities, comprehensive technology portfolio with a long-term track
record for consistently delivering high-quality products, and growing
presence in Asia, our resins business has a competitive advantage that we can
continue to build on into the future."
"As stated at our full year results announcement, we expect to deliver
improved returns and earnings growth in the short to medium term as a result
of the strategic initiatives undertaken over the past few years. Importantly,
the expected growth outlook for the Company is not reduced by the divestment
of Nuplex Specialties and Nuplex Masterbatch."
"Over the past three years, we have invested approximately $60 million in
capacity expansion projects in the faster growing Asian economies. Looking
beyond the current financial year, the additional earnings from these
projects are expected to largely offset the loss of earnings from the sale of
the two businesses."
"Selling Nuplex Specialties and Nuplex Masterbatch will allow these
businesses to focus on their own strategies and opportunities for growth, and
optimises the long term interests of Principals, customers and staff," said
Mr Severin.
Axieo has advised that it is their intention that all employees currently
working within Nuplex Specialties and Nuplex Masterbatch will be offered
employment. On completion of the transaction, Mr Ivan Tottle has decided to
leave Nuplex to pursue other opportunities.
"I want to thank Ivan and the team at Nuplex Specialties and Nuplex
Masterbatch for their hard work over the past few years and I wish them every
success in the future," Mr Severin said.
Initially the sale proceeds will be used to pay down debt. Adjusting for the
impact of the transaction, gearing as at 30 June 2014 would have been 14.5%
rather than the reported 31.1%.
The increased financial flexibility arising from the divestment of these
businesses creates an opportunity for the Board to assess how best to
continue progressing Nuplex's strategy to maximise value for shareholders.
Options to be considered include further pursuing growth initiatives in
emerging markets, increasing R&D investment, identifying other value creating
investment opportunities, and a potential return of capital to shareholders.
Nuplex expects this review to be completed in the fourth quarter of the 2015
Financial Year.
"The review of capital management options will be conducted with regard to
the company's strict investment criteria. We are committed to pursuing our
ambition to be a leading, trusted, independent resins manufacturer globally
and delivering the target ROFE of 16% within the two year period between the
2016 to 2018 Financial Years," Mr Severin said.
The Board expects to maintain the dividend payout ratio range of between 55%
and 65% of net profit attributable to shareholders. It will also continue to
take into account the importance of maintaining the level of dividends per
share it pays with the prior year while still maintaining a strong balance
sheet.
The majority of the transaction, which relates to those activities in
Australia and New Zealand, is expected to be completed by the end of 2014.
The completion of the sale of the masterbatch operations in Vietnam is
expected to take place within in the first half of 2015. This represents less
than 5% of the transaction.
Completion is subject to standard terms and conditions including absence of
material adverse changes, Axieo satisfying drawdown conditions to its
committed financing, consents from key third party stakeholders and Axieo
obtaining key operational permits.
Nuplex was advised by Greenhill Australia and Allens Linklaters.
Management briefing
A briefing will be hosted by Chief Executive Officer, Emery Severin, at
12.00pm (NZST) today.
This briefing will be live via webcast on the Nuplex Industries website
(www.nuplex.com/Corporate/corporate/investor-centre), where it will also be
archived.
For further information, please contact:
Josie Ashton, Investor Relations ? +612 8036 0906 ? [email protected]
About Nuplex
With approximately NZ$1.6bn in sales in over 80 countries worldwide, Nuplex
is a global specialty chemical company dedicated to the production of
innovative, high-quality resins. With a global manufacturing network, Nuplex
has leading market positions in local and regional markets in Australia & New
Zealand, Asia, Europe and America, particularly in resins used for
decorative, industrial, automotive, and protective coatings and composite
resins. Through solution focused R&D activities, product and industry
knowhow, Nuplex understands the needs of our customers' customers which
enables Nuplex to work in partnership with our customers to respond to their
coatings challenges.
About Axieo
A newly-created company, Axieo Pty Ltd (www.axieo.com) a newly created
company that has been formed with support from funds advised by CHAMP Private
Equity. Axieo's inaugural CEO, Sam Bastounas, has 24 years' experience in the
chemicals, plastics and food ingredients sectors across Australia, New
Zealand and Asia. He has worked in companies including Dulux, Orica and
Nuplex. Until early 2014, Mr Bastounas was Nuplex's Regional President of
Australia and New Zealand, and the Chief Operating Officer of its Specialties
business prior to that.
About CHAMP Private Equity
CHAMP is one of Australasia's largest independent buyout fund managers having
successfully raised the CHAMP III Funds, a A$1.5 billion fund, in 2010. CHAMP
is the only Australian-based private equity advisor with an on-the-ground
presence in Asia, having opened a Singapore office in 2008 to assist its
portfolio companies to expand into Asia. The CHAMP III Funds are focused on
investing in Australian, New Zealand and Southeast Asian businesses.
A COPY OF THE INVESTOR BRIEFING MATERIALS ACCOMPANIES THIS ANNOUNCEMENT
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