Southern Capital Acquires 50 Percent Of Hire Firm

20 August 2002

Southern Capital Acquires 50 Percent Of Leading Equipment Hire Firm, Hirequip

Wellington based listed company Southern Capital Limited today announced it has bought 50 percent of leading equipment hire firm Hirequip for $17.3 million, acquiring the interest of GS Private Equity Pty Limited, part of the Grant Samuel & Associates Group.

“This is a significant investment for Southern Capital in terms of its size, cashflow and growth potential. It is also the first industrial operating company in which we have invested,” said Graeme Wong, Executive Chairman of Southern Capital Limited.

Settlement will take place today, 20 August 2002. The other 50 percent of Hirequip will stay in the hands of Stuart McKinlay and family of Dunedin. Mr McKinlay is Managing Director of Hirequip.

A private company based in Dunedin, Hirequip is New Zealand’s only nationwide general and specialist equipment hire company, operating from 36 locations throughout the country.

Established in the early 1950s, the company acquired Projex in September 2000. This saw Hirequip become New Zealand’s largest hire company at around twice the size of its nearest competitor. Its revenues now exceed $50 million annually.

Hirequip’s product catalogue is diverse with over 100,000 items for hire from one to 30 tonne excavators, front-end loaders, road rollers, 9 tonne trucks, generators, compressors, DIY equipment, right through to a party and function division that provides marquees, toilets, crockery and lighting equipment.

Southern Capital will have two directors on the board of a new holding company to be formed, Mr Wong, and Southern Capital Director Howard Paterson, also of Dunedin. The other directors of the company are Mr McKinlay and Trevor Scott, a prominent South Island company director and chartered accountant, who will remain chairman.

“Hirequip’s size brings significant economies of scale in equipment purchase as well as enabling the company to provide specialist equipment for the larger construction projects being undertaken at any one time.

“The company has increased its focus on the Auckland market over the last two years and is well poised to benefit from increased infrastructure expenditure planned for the region, given that it is the preferred equipment provider of major roading contractor, Fulton Hogan.

“Given the very fragmented nature of the equipment hire business in New Zealand, there is also potential to further grow the company through the acquisition of small providers with a strong local presence,” Mr Wong said.

Hirequip’s Managing Director Stuart McKinlay welcomed Southern Capital’s investment in the company saying: “The involvement of Southern Capital provides Hirequip with a partner who shares our assessment of the potential of the sector and is committed to growing the company. Hirequip will now revert to being 100% New Zealand owned.”

Southern Capital Limited owns outright the Pegusus Bay township development north of Christchurch and is the major shareholder in Omaha Beach Limited, a 600 lot premium beach development north of Auckland. Other Southern Capital investments include interests in: a 460-hectare marine farming application at Clifford Bay, Marlborough; the Canterbury Supa Centa, a large format retail development at Belfast; and a proposed motorway service area near Kaiapoi. Southern Capital is also a shareholder in biotechnology companies, BLIS Technologies (10.4%), A2 Corporation (8.9%), Botry-Zen (4.3%) and Pharma-Zen (5.6%), and has an interest in the Tasmanian farming company, Tasman Farms Limited (21.7%).

ENDS

Issued by Sorensen Group on behalf of Southern Capital Limited

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