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Microsoft PowerPoint - BBL Capital Raising - Road Show ...
12/11/2009 BBL Capital Raising December 2009 BOUNDARY BEND LIMITED ABN 32 115 131 667 Important Information This is an important document Recipients should read the Prospectus in its entirety and, if in doubt, should consult their professional advisors. The Prospectus is dated 13 November 2009 and a copy of this Prospectus was lodged with the ASIC on that date. ASIC takes no responsibility for the content of this Prospectus. The investment in Shares offered by this Prospectus should be considered speculative. Exposure Period The Corporations Act prohibits BBL from processing any Applications in the seven day exposure period after the date of lodgement of this Prospectus (Exposure Period). The Exposure Period may be extended by ASIC by up to a further seven days. The purpose of the Exposure Period is to enable the Prospectus to be examined by market participants prior to the raising of funds. Applications received during the Exposure Period will not be processed until after the expiry of the Exposure Period. No preference will be conferred on any Applications received during the Exposure Period. Foreign jurisdictions The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate Shares laws. Applicants who are residents in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed. 2 1 12/11/2009 Important Information Future performance and forward looking statements The Prospectus includes certain statements, calculations and projections concerning the anticipated future performance of BBL and the olive industry in general (‘Forward Looking Statements’). Those Forward Looking Statements may or may not prove to be correct and for that reason no person in connection with the Prospectus accepts any responsibility or liability in relation to the accuracy or reasonableness of any Forward Looking Statement and the recipient of the Prospectus must make and rely on its own assessment. The Recipient must make their own independent investigations and rely upon their own enquiries as to the accuracy and completeness of any of the Information, the accuracy of any Forward Looking Statements and the reasonableness (or otherwise) of the assumptions on which the Forward Looking Statements are based. The Recipient should seek appropriate professional advice in reviewing Information and evaluating whether to purchase Shares. Despite using best endeavours and making all reasonable enquiries in compiling the Forward Looking Statements, they are subject to change and there are numerous risk factors which may cause them to be materially different from those set out in section 9 of the Prospectus. For details of some of the risk factors you need to consider, please refer to section 13. BBL does not intend to update or revise the Forward Looking Statements, regardless of whether or not it has a material impact on the Forward Looking Statements provided in this Prospectus, except where required to by law. Disclaimer of representations No person is authorised to provide information or to make any representation in connection with this Prospectus which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. 3 Who is Boundary Bend? • Boundary Bend Limited (BBL) is an unlisted public company • Founded by Rob McGavin and Paul Riordan in late 1990s • Fully vertically integrated Extra Virgin olive oil business • Started managing Timbercorp olive operations in late 2004 • Recently entered into contracts to purchase all the Timbercorp olive assets • Now raising between $12.5m and $25m in Equity 4 2 12/11/2009 The company now The company now Nursery: a specialist olive nursery supplying olive trees to commercial growers, wholesale and retail nurseries and national chain stores. Grove Operations: the BBL Group has owned and managed olive groves since 1999. In 2004 the BBL Group commenced managing olive groves on behalf of Timbercorp. Originally, the BBL Group managed 2,777 ha which by 2009 had expanded to over 6,500 ha. Harvesting Technology: in partnership with MaqTec in Argentina, the BBL Group has developed and sold the Colossus olive harvester in the Australian market. BBL holds the exclusive licence to manufacture, service and market the Colossus in Australia. Processing and Storage: a processing and storage facility at Boundary Bend and Boort (following the purchase of the Timbercorp Olive Assets). 3 12/11/2009 The company now Bottling: an olive oil filling and packaging business at Corio. Technical Advice and Laboratory Services: advisory services, covering all aspects of the industry relating to project development, technical advice and applied research. The BBL Group also owns and operates an olive oil laboratory located at Corio. Marketing and Sales:The BBL Group is Australia’s largest marketer of Australian olive oil, supplying branded, private label and bulk Australian olive oil to Australian customers. BBL exports to a number of countries including the USA, Canada, China, Spain and Italy. Today the BBL Group’s flagship retail brand, Cobram Estate, is the number one selling brand of Australian grown EVOO by volume and value in a leading Australian supermarket with approximately 41% market share by volume for the period 1 July 2009 through 15 September 2009 (Source: AZTEC scan data, 2009). Location of Operations Mildura Boundary Bend Wemen Boort Port Corio Melbourne Lara 8 4 12/11/2009 BBL Directors Executive Directors • Rob McGavin (Corporate) • Paul Riordan (Operations) • Leandro Ravetti (Technical) • Tim Smith (Sales/Marketing) Non-executive Directors • Tim Jonas • Craig Ball • Jonathan West 9 Key BBL milestones • 30 June 1999 First funds raised from investors (approx. $6m) to fund 200 ha of olives at Boundary Bend. • May 2002 First commercial harvest (80,000 litres) • May 2004 Official opening at Boundary Bend Estate of processing facility by Stefano de Pieri. Produced 668,000 litres of oil. • 1 November 2004: Commenced managing Boort olive Grove. • June 2005 First Australian company to produce over 1 million litres of oil. 10 5 12/11/2009 Key BBL milestones • Effective 1 July 2005 BB consolidated all related entities into public unlisted company - Boundary Bend Limited. • July 2005 BBL commenced marketing all the oil produced by the Timbercorp groves. • September 2005 Commenced planting and managing for Timbercorp in the Boundary Bend region. • December 2006 Purchased Cobram Estate retail brand. • 23 April 2009 Timbercorp goes into voluntary administration • 12 October 2009 BBL signs agreements to purchase Timbercorp Olive Assets 11 Awards • October 2004 BBL won the Australian Olive Association inaugural “Olive Grove of the Year” award. • September 2007 Victorian Government Agribusiness Exporter of the Year award. • October 2007 NAB Agribusiness Award for Excellence in Export. • November 2007 Australian Government Agribusiness Exporter of the Year award. • 28 October 2009 Cobram Estate won Best Oil in Australia at National Olive Oil competition. • 29 October 2009 NAB Agribusiness Awards – BBL won The Innovation in New and Emerging Industries award. 12 6 12/11/2009 What did we purchase? Boort Assets 1. 2,777 hectares (ha) of freehold planted olive grove (total area 4,814ha) 2. 15,439 megalitres (ML) of Permanent Water Rights (“PWR”) 3. Olive processing plant (excellent modern plant, top 10 by capacity in the world) 4. 4.8 million litre (stainless steel) oil storage facility at Boort 5. 20ha of winegrapes 6. 500ha of plantable vacant land 7. Numerous items of plant and equipment What did we purchase? Boundary Bend Assets 8. 3,235ha of freehold planted olive groves (total area 4,545ha) including: i. 2,393ha planted groves at Boundary Bend Estate (total area 3,085ha) ii. 842ha planted groves at Ryans in the Wemen area (total area 1,460ha) 9. 10,732 ML of PWR including: i. 9,342 ML of PWR at Boundary Bend Estate ii. 1,390 ML of PWR at the Ryans property 10. 6,817,220 shares in BBL (19.4% of BBL) 11. The leasehold interests relating to the 520ha of planted groves owned by BBL and 3,545 ML of PWR. 7 12/11/2009 On what Basis were the assets sold / Growers participation? • Korda Mentha sold all the olive assets on an unencumbered basis (free from MIS). • The court has determined that the Cash received from the sale of the olive assets will be held until the court decides how much money should go to the secured creditors (banks) and how much should go to MIS growers. This should be determined by the courts at a future date. • Separate to any payment Growers may or may not get from the asset sale, BBL is offering Timbercorp MIS olive growers an entitlement to purchase shares in BBL (see BBL prospectus). • Growers who do not subscribe for BBL shares through the prospectus will not become shareholders of BBL. 15 How is BBL funding the acquisition and working capital? • Sale of water to a Victorian Super Fund for $49.25m then leasing it back from them • Raising $12.5m to $25m in equity • Increasing BBL core debt facility from $28.2m to $45m • A seasonal harvest facility of $15m 8 12/11/2009 Purpose of equity raising BBL is seeking to raise $12.5 to $25m to fund: • operating costs and capital expenditure • purchase new harvesting equipment – to handle increased volumes of fruit • upgrade the BBE processing plant – to handle increased volumes of fruit • the acquisition of Timbercorp Olive Assets (if required) 17 Key Investment Highlights Robust asset base: Net assets of $30.2 m (30 June 2009). Timbercorp Olive Assets purchased for $59.5m (replacement value of approx. $260m) Strong growth: Almost 75% of the Groves are yet to reach full maturity. 42% are 3 years old or less. Vertical integration: Fully vertically integrated Extra Virgin olive oil business 18 9 12/11/2009 Key Investment Highlights Economies of scale: two of the world’s largest single estate olive groves Marketing: through ‘Cobram Estate’ brand, bulk oil and private label supply, BBL currently markets 50% of Australia’s production Knowledge of the assets: managed Boundary Bend Groves since inception and Boort Groves since late 2004 19 Domestic Production / Imports 10 12/11/2009 Global Production and Consumption Age profile of Groves • 48% of the BBL Group’s olive groves are 4 years old or less. • Fixed costs are expected to remain fairly constant, but the yield will continue to increase until the groves reach their optimal level • The trees remain at this optimal level of production for approximately 12 to 22 years 11 12/11/2009 Yield Evolution • 42% of the BBL Group’s groves are 3 years old or less • Therefore, yield will continue to increase for the next 4 to 5 years Historical Prices • Global olive oil prices exhibit a high degree of volatility associated with supply and demand dynamics and global macroeconomic activity. Spain, as the largest producer of olive oil, is effectively the price setter in the global market. 12 12/11/2009 Historical Profit and Loss 2009 2008 ($) ($) Sales revenue 39,359,759 33,651,641 Other income 8,456,170 8,813,911 47,815,929 42,465,552 Cost of sales (33,654,154) (25,513,571) Distribution, marketing, occupancy, administrative and other expenses (8,365,488) (8,756,633) Fair value adjustment to biological assets (9,585,580) Impairment of non-current assets (13,152,278) Finance costs (1,669,890) (2,136,161) (66,427,390) (36,406,365) Profit/(loss) before income tax expense (18,611,461) 6,059,187 Income tax (expense)/benefit (387,425) (1,186,992) Profit/(loss) from continuing operations (18,998,886) 4,872,195 Net loss attributable to minority interests (69,117) - (Net profit/(loss) attributable to the members of the parent) (18,929,769) 4,872,195 Historical Profit and Loss normalised 2009 2008 ($) ($) Normalisation Adjustments Profit/(loss) before income tax expense (18,611,461) 6,059,187 add back Timbercorp related losses 1 2,194,163 - add back fair value adjustment to biological assets 2 9,585,580 - add back impairment of non-current assets 3 13,152,278 - (Normalised Profit / (loss) before income tax expense) 6,320,560 6,059,187 1. $2,194,163 relates to the Timbercorp collapse and resultant bad debts and nursery tree obsolescence write-downs. 2. The fair value of the olive groves was assessed by an independent valuer as at June 2009. The olive groves were valued at $2,156,266 (FY08: $11,741,846), leading to a fair value adjustment of $9,585,580 3. Goodwill and other impairments of $13,152,278 predominately relating to the Timbercorp collapse (see next slide) 13 12/11/2009 Forecast Profit and Loss FY2010 ($’000) Sales and other revenue 54,541 Fair value adjustment to biological assets 10,999 65,540 Cost of sales (45,316) Distribution, marketing, occupancy, administrative and other (9,879) expenses (55,195) Profit/(loss) before income interest and tax expense 10,345 Finance costs (3,729) Profit/(loss) before income tax expense 6,616 Income tax (expense)/ benefit (1,745) Profit/(loss) from continuing operations 4,871 Key Assumptions to the Forecast • Sale of approximately 9 million litres of olive oil • The 2010 crop is forecast to produce approximately 9,700,000 litres of olive oil • Price of $4.46 per litre (net of point-of-sale costs) used to calculate the fair value of the 2010 crop • Direct costs associated with the Groves based on historical experience and expected future costs • Average interest cost of 8% • 55% of permanent water entitlements are available and a temporary water price of $250 per ML (see next slide) 28 14 12/11/2009 Key Assumptions to the Forecast - Water • The Groves will require approximately 32,250 ML for the year to 30 June 2010 • BBL will receive the benefit of owning or leasing approximately 29,700 ML of PWR (subject to the PWR allocation) • Shortfall to be purchased from the temporary market • BBL estimates that is will receive a PWR allocation of 55% and will pay on average $250 per ML of temporary water for the 2009/2010 water season 29 Sensitivity Analysis Change in the oil price used in 2010 crop fair value (EBIT impact for the Forecast Period) • increase by 10% + $4,349,000 • decrease by 10% - $4,349,000 Change in the oil yield (EBIT impact for the Forecast Period) • increase by 10% + $4,349,000 • decrease by 10% - $4,349,000 Change in PWR allocations (EBIT impact for the Forecast Period) (using a base PWR allocation of 55%) • increase by 10% (i.e. allocation of 65%) + $743,000 • decrease by 10% (i.e. allocation of 45%) - $743,000 Change in temporary water price (EBIT impact for the Forecast Period) (using a base temporary price of $250 per ML) • increase by 10% - $398,000 • decrease by 10% + $398,000 15 12/11/2009 Capital structure • As at the date of this Prospectus the Company has 35,214,850 Shares on issue and a total of 1.25 million Options. • Timbercorp currently owns 6,817,220 Shares representing 19.4% of the share capital of the Company. These shares form part of the assets being purchased and at settlement these shares will be cancelled. • Following the buyback of the Timbercorp shares and if the Company raises the maximum amount of $25 million under this Prospectus it will have a total of 47,628,399 Shares on issue. 31 Directors’ interests in Shares (pre capital raising) Name Shares Rob McGavin 7,784,241 Paul Riordan 6,109,118 Leandro Ravetti 624,764 Tim Smith 103,846 Tim Jonas 608,204 Craig Ball 205,062 Jonathan West 0 32 16 12/11/2009 Risk Summary The following table sets out a summary of the key risks associated with investing in the Company. This list of risks is not exhaustive. Full details of each of these risks tabled below are in Section 13 of the Prospectus. Risk Risk Area Risks specific to the • Water availability and water cost operations • Physical risks including fire, insect infestation, disease, frost, flood, hail, storm damage • wind damage and other acts of God • Reliance on key personnel and employees • Environmental risks and regulations • Risk of adverse climatic conditions • Risk of movements in the price of olive oil and foreign exchange rates • Risk of losing key customer contracts within Australia or in export markets • Risk in adverse changes in standards for EVOO Risk Summary Risk Risk Area Risks associated with • Risk of not having sufficient funds for future the capital structure capital requirements • Risk of breaching debt covenants Risks associated with • Risk of conditions precedent in the SPDs not being the completion of satisfied or waived the Timbercorp Olive Assets Acquisition General Risks • Risk of adverse change in general economic and market conditions including interest rates • Risk associated with investment in equity market securities • Risk of changes to legislative, government policy and approvals • Litigation risk • Risk of inadequate insurance 17 12/11/2009 The Offer Minimum Maximum Amount Amount Offer price per share $1.30 $1.30 Shares offered under this Prospectus 9,615,385 19,230,769 Shares on issue following the offer 38,013,015 47,628,399 Market Capitalisation at Offer price $49,416,919 $61,916,919 Financials FY 10 FY 10 (forecast) (forecast) NPAT $4,871,000 $4,871,000 EPS 12.81 cents 10.23 cents 35 Grower Priority Entitlement Grove Lots for each Allocation per Timbercorp Net Operating Timbercorp Timbercorp Allocation per Olive Project Cashflows % of Total Olive Project Olive Project Grove Lot $ # $ $ 2000 Private Offer 24,060,883 9.0% 1,448 2,250,000 1,553.87 2001 60,872,232 22.7% 3,919 5,675,000 1,448.07 2002 28,017,343 10.4% 1,870 2,600,000 1,390.37 2002 (Post June) 9,603,080 3.6% 717 900,000 1,255.23 2003 33,146,847 12.4% 2,153 3,100,000 1,439.85 2003 (Post June) 4,777,569 1.8% 350 450,000 1,285.71 2004 8,277,208 3.1% 623 775,000 1,243.98 2006 28,115,936 10.5% 2,795 2,625,000 939.18 2007 20,175,098 7.5% 2,440 1,875,000 768.44 2007 (Post June) 4,374,001 1.6% 558 400,000 716.85 2008 46,959,831 17.4% 7,028 4,350,000 618.95 Total 268,380,028 100.0% 23,901 25,000,000 18 12/11/2009 The Shortfall • Growers who do not wish to take up any portion of their Entitlement are not required to take any action • Entitlements not taken up will form part of the Shortfall • Growers or Other Investors may apply for the Shortfall, which will be allocated by the Board at its discretion 37 Where to get your Entitlement Form 1. Apply online at www.boundarybend.com 2. Call the Share Registry and ask for your personalised Entitlement to be emailed to you with a copy of the Prospectus To received your entitlement you will need to provide the details of your Timbercorp Olive Project, including your Grower ID, the Investment Name and your postcode. Should you not have your Grower ID number please email email@example.com, and provide the following information: 1. Name of your entity that held the Timbercorp Olive Project MIS investment as at 23 April 2009 2. Address of Investment entity and 3. The name of your financial planner/adviser (if applicable) 38 19 12/11/2009 Contact Details BOUNDARY BEND LIMITED C/- Link Market Services Limited, Reply Paid 3560, Sydney, NSW, 2001 SHARE REGISTRY Link Market Services 1800 622 202 (within Australia) or +61 2 8280 7694 (from outside Australia) between the hours of 9.00am and 5.00pm (EDST) Monday to Friday during the offer period 39 Timetable Event Date Record Date for determining Grower 23 April 2009 Entitlements Lodgement of Prospectus with ASIC 13 November 2009 Closing Date of Offer 18 December 2009 Despatch date/Shares entered into 24 December 2009 shareholders security holdings The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares. If in doubt, you should consult your accountant, lawyer, stockbroker or other professional adviser. 40 20 12/11/2009 How to Apply 1. Visit our website www.boundarybend.com 2. Read the prospectus and if satisfied with the investment; 3. Apply for shares • Complete on-line application and payment OR • Call the Share register on 1800 622 202 • APPLICATIONS CLOSE 5.00PM 18 DEC 2009 21
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