Pohutukawa II Invests in Scales Corporation Limited

3 May 2011

Pohutukawa II has announced its fourth portfolio company investment. Pohutukawa II and Direct Capital IV, together with co-investment from New Zealand Superannuation and Accident Compensation Corporation, have conditionally acquired a majority shareholding in Scales Corporation Limited (“Scales”), a leading New Zealand horticultural and primary processing, exporter and logistics business.

The combined equity stake to be acquired will be 79.7% of which Pohutukawa II’s shareholding will be 8.7%.

Operating through a number of distinct divisions the company has a long and successful history of operating in New Zealand.  Mr Apple is the largest grower, packer and exporter of apples in New Zealand.  Meateor Foods exports processed meat that is used in the world’s leading pet food brands.  Scales’ service businesses include New Zealand’s largest cold store network, a bulk liquids storage business and a logistics business.

Direct Capital has acquired the majority interest in Scales through the receivership of South Canterbury Finance Limited, which was placed in receivership in August 2010. 

The investment by Direct Capital is a strong endorsement of the New Zealand primary agriculture industry.

“Direct Capital as a new positive shareholder with a significant capital base will provide Scales certainty in moving forward with its plans to develop and grow the Company” says Scales CEO Andy Borland.

The investment in Scales is the fourth investment from Pohutukawa II, which raised $82.5 million in February 2009 for investment into New Zealand private companies. The investment into Scales is subject to a number of conditions, including a Scales’ shareholder vote, and is not expected to settle before early July 2011.  The investment will be initially funded through a drawdown of existing short-term bank facilities. 

As the Manager is currently also assessing other investment opportunities which may impact the amount of the cash call, the amount and date of the call will be advised later.  If both additional investments go ahead the shareholder call could be as much as 20 cents per share. 

A further update including the date and quantum of the call will be provided at the Annual Shareholders Meeting on the 17th May 2011.