Brierley creeps up his Kirkcaldie stake, ahead of David Jones' payday
By Suze Metherell
Oct. 16 (BusinessDesk) - Veteran corporate raider Ron Brierley has lifted his stake in Kirkcaldie & Stains for the third time since Australia's David Jones announced plans to take over the unprofitable Wellington
department store.
Brierley increased his holding in Kirkcaldie to 9.4 percent from 8.4 percent via his ASX-listed investment vehicle
Mercantile Investment Co, buying 106,000 shares for a total of $233,000, or $2.20 a piece, on market last week,
according to a substantial holding notice lodged with the NZX. In June, Kirkcaldie announced it will shut up shop after
152 years as it entered into a deal with South African-owned David Jones. Since then the corporate raider has
incrementally increased his stake, spending $199,317 in June to lift it to 6.9 percent from 5.7 percent, and a further
$296,253 in July taking his stake to 8.4 percent.
David Jones will use the prime Lambton Quay location on Wellington's "golden mile" shopping precinct for its first New
Zealand store, freeing up Kirkcaldie's board to return cash to shareholders.
Like many bricks-and-mortar stores, Kirkcaldie has been forced to discount stock to compete with online rivals.
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 flagship store, 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 exiting its Lambton Quay store in
February.
The New Zealand retailer had $18 million in cash and equivalents as at June 4 after selling its neighbouring Harbour
City Centre. 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 from $1.68 prior to the deal, having
slumped to a record low $1.58 late last year. The stock last traded at $2.20.
Brierley first emerged as a substantial holder of Kirkcaldie in 2011 when the company's shares were seen trading at a
discount to the value of the company's real estate, the Harbour City Building. Around that time, former Brierley
Investments chairman Selwyn Cushing and his son David Cushing lifted their family’s stake in the retailer to 17.1
percent and currently hold 19.5 percent, according to the Companies Office. The Cushings and Brierley are known for
buying undervalued assets.
(BusinessDesk)