Baycorp Collection Services Sold for A$97 Million

Baycorp Advantage has agreed to sell its debt collection business, Baycorp Advantage Collections Services (BCS), for A$97 million (US$74.73 million)to Trans Tasman Collections (TTC), a consortium including Allco Equity Partners and Deutsche Bank Capital Partners. The sale follows the conclusion of a competitive sale process, which included an evaluation of both trade sale and initial public offer options.

Key features of the transaction are:

• TTC will pay the full acquisition price of A$97 million in cash on completion, expected to occur prior to 30 June 2006;
• The sale is conditional on:
  • Approval from the Australian Foreign Investment Review Board;
  • Approval from the New Zealand Overseas Investments Commission;
  • Approval from Baycorp Advantage shareholders under ASX Listing Rule 10.1, unless the ASX waives this requirement.

Baycorp Advantage Managing Director Andrew Want said: “This is an excellent outcome for our shareholders, and is the result of the outstanding job done by the BCS team, under the leadership of Managing Director Stephen Benton, in rebuilding and positioning the business.

“The sale of BCS is a key part of our strategy to focus on the enhancement of our information and data assets and on the expansion of our analytics and technology capabilities.

“It’s a vital step towards achieving our vision for Baycorp Advantage as a fast-moving, streamlined information services business ? the leading provider of business intelligence services in our region.

Subject to usual adjustments at completion, the sale price will represent a premium of about A$15 million to the book value of BCS. “TTC has bought a strong asset and a great platform for future growth. We’re pleased for both our customers and our staff that the BCS business is going to owners with an established presence in and commitment to the debt collection industry.

“The sale allows us to implement further capital management initiatives, following on from last year’s capital return to shareholders and the current on-market share buyback. We intend to make an announcement on capital management prior to completion of the transaction following the completion of detailed analysis.?

Baycorp Advantage will retain an ongoing commercial relationship with BCS, including the provision of BCS data to the Baycorp Advantage credit bureaux. BCS will acquire analytics and data enhancement services from Baycorp Advantage.

“The commercial arrangements we’ve agreed provide the freedom for Baycorp Advantage Group and BCS to focus independently on their respective markets, while at the same time preserving access to data flows,? Mr Want said.

Under the deal, Baycorp Advantage Group will adopt a new name and brand within the next 12 months. BCS acquires ownership of the “Baycorp? name for use in the debt collection industry.

Mr Want said: “We plan to announce details of the name change once we’ve completed the customer research we have underway, and we’ll seek shareholder approval to the name change at the group’s AGM in October.

“We’re also finalising our plans to restructure the ongoing cost base to remove the A$6 million overhang of central costs which results from the sale.?

As Allco Equity Partners is a 17.3 per cent shareholder in Baycorp Advantage the sale is a ‘related party’ transaction and requires shareholder approval under ASX listing rules. Baycorp Advantage will apply to the ASX for a waiver of the requirement for shareholder approval on the basis that the sale is the result of a competitive public sale process. If a waiver is not forthcoming, a shareholder meeting to approve the transaction will be held in June with a view to completion of the transaction before 30 June 2006.

Baycorp Advantage was advised by Caliburn Partnership, Mallesons Stephen Jaques and Russell McVeagh.