KwaZulu-Natal Correspondent
DURBAN Fast-food group Steers Holdings had withdrawn from the acquisition trail "for at least three years" as it bedded down the R150,6m purchase of Pleasure Foods, the group said yesterday when releasing interim results to August.
Chief operating officer Kevin Hedderwick projected that the group would have repaid the debt within five years, while the Pleasure Foods brands Wimpy and Whistle Stop added 15% annually to turnover.
If approved by the Competition Commission in early December, the acquisition will push Steers' gearing to 90%.
Steers announced the ambitious acquisition in August when its market capitalisation was R106,4m. It will finance the venture through a combination of cash reserves and debt finance.
It has raised R95m as medium-term finance and allocated R35m to be raised via a vendor consideration placing of 22,5million shares at 155c each. The remaining R20,6m will come from its cash resources.
The transaction will catapult Steers' complement of franchised restaurants to more than 1000, firmly establishing it as the leading quick-service restaurant in Africa.
However, Steers would concentrate on consolidation over the next five years, driving growth through the Steers, Fishaways, Debonairs Pizza and Church's Chicken brands, Hedderwick said.
In the past year, the group has also expanded into the franchised coffee market by acquiring, under licence from Anglovaal Industries, the House of Coffees, ESP Illy Boutique and Brazilian Coffee Shop brands.
These networks may be expanded in the current year.
Hedderwick said the group's brand portfolio and commitment to franchisee and licensee network pushed operating profit before tax 38% to R14,6m. Headline earnings grew 39% to R9,4m, translating into 14,5c (2002: 10,4c) at the share level. Steers has declared a 6,5c a share capital distribution in lieu of a dividend (6c).
Driven by organic growth and improvements in existing stores, the group's turnover rose 15% to R163,1m.
Steers has 595 franchised restaurants under management locally and abroad, operating in the key segments of burgers, pizza, fish and chicken.
Hedderwick said the warehouse fire that gutted Steers' Midrand property in June had not significantly disrupted business.
The group has received an interim insurance payment of R19m and final settlement is expected by December.
Oct 28 2003 07:19:42:000AM Nicola Jenvey Business Day 1st Edition
Publisher: Business Day
Source: Business Day
