Festive season flurry of backdoor listings

WHILE most of the state was taking a breather over the festive season, three Western Australian companies were busy tying up backdoor listing deals that radically change their areas of operation.

And while many may not instantly recognise the company names, the names of those involved are a little better-known – with Simon Lee, Miles Kennedy, Mark Bouris, Lyndon Rowe, Farooq Khan and Patrick O’Connor all featuring.

One-time labour hire firm ITS Capital Investments kicked-off proceedings by announcing it would buy Wizard Home Loans founder Mark Bouris’ new venture in exchange for control of the company.

Yellow Brick Road, which provides wealth management advice and products to retail and SME clients, will receive up to 99.3 million ITS shares, equating to an 87 per cent stake in the company.

Yellow Brick Road currently operates in New South Wales, Victoria and Queensland, and grew from 16 to 46 branches in 2010.

Mr Bouris left Wizard in 2004 after selling the business to GE Capital, and founded Yellow Brick Road in 2007, using a similar franchise-type business model to Wizard.

Yellow Brick Road branches are owner-operated and located in suburban shopping centres and strips, supported by a centralised head office that coordinates compliance training, marketing and sales.

The company aims to become a ‘disruptor’ brand, challenging the established banks in the wealth management and mortgage markets in Australia.

It has an agreement with deposit-taking institution Gateway Credit Union, which allows it to market its own mortgage offerings.

ITS is currently chaired by Economic Regulation Authority head Lyndon Rowe, but he will relinquish control to Perth businessman Farooq Khan as part of the deal.

After the acquisition is complete, up to three Yellow Brick Road directors will take join the ITS board and some ITS directors will be asked to step down.

ITS previously traded as Interstaff International and was founded by Dan Engles, former Chamber of Commerce and Industry WA economist.

ITS hopes the acquisition will be completed by April this year.

In May last year, Mr Engles and his wife bought out the migration services part of the business and continue to trade as Interstaff.

Next up was chemicals investor Xceed Capital, which bought Africa-centred Focus Coal Investments as part of its strategy to change direction and boost shareholder return.

Xceed, led by Water Corporation chairman Patrick O’Connor, has consolidated its shares from 200 million down to 20 million and will give 25 million shares to Focus’ shareholders as part of the deal.

The company also will embark on a capital raising to fund the acquisition, hoping to raise $9 million through the issue of a further 45 million Xceed shares.

The company is also looking to sell its wholly owned chemical manufacturer Boron Molecular for $1.5 million.

Boron Molecular has offices in Melbourne and North Carolina in the US, and was established in 2001.

Following the acquisition, Focus directors Stephen Belben and Ian Culbert will join the Xceed board as managing director and finance director respectively.

Mr Belben is the executive director of St George Capital, of which Mr O’Connor is also a director, and was previously a partner at Ernst & Young’s Perth office for 11 years.

Mr Culbert was previously managing director of NSW-focused coal miner Tritton Resources, which was acquired by Straits Resources in 2006.

Focus holds a 74 per cent interest in the Moabsvelden coal project near Delmas in South Africa, as well as the right to acquire a similar interest in a nearby project.

The project is still in its infancy though, with a feasibility study and mining licence still in the works and operations at the site not expected to commence until 2012.

The company said in a statement that it had been searching for an opportunity to change direction and increase profits.

“The directors note the very positive outlook for thermal coal prices and believe that the acquisition of a long life, low cost operation, such as Moabsvelden, ideally positions the company to take advantage of this outlook,” Xceed said.

Xceed also hopes to complete its acquisition deal by April this year.

Finally, shares in Medical Corporation Australasia more than trebled in value after it announced plans to acquire resources explorer Amphion International, jumping from 2.5 cents to 15.5 cents in a single day.

The Simon Lee-chaired MOD will offer more than 37 million in shares to Amphion in exchange for a 100 per cent interest in the junior explorer, led by Miles Kennedy.

The company will also offer a share placement of up to $2.8 million, or 80 million shares.

Major shareholders of Amphion include financial heavyweights Andrew Forrest, James Packer and former Multiplex director Tim Roberts.

Following the acquisition, Mr Kennedy and fellow Amphion director Mark Drummond will join the MOD board.

Mr Kennedy said that the company would have reserves of about $12 million after the acquisition and placement are complete, leaving the company prepared to indentify a suitable resources project to invest in.

Mr Kennedy was founding chairman of New Zealand gold miner Macraes Mining, and Kimberley Diamond Co, as well being former chairman of Sandfire Resources and current chair of Resource & Investment.

Mr Drummond is a former business journalist who led Amphion’s restructure and recaptialisation after leaving the media in 2008.

Mr Lee, who has history of establishing gold companies including Equigold and Smantha Gold, said the transaction would provide MOD with the skills and financial backing to capitalise on the opportunities the resources sector presented to investors.

Shares in MOD have retained their value, now hovering around 16 cents.

The acquisition is still subject to shareholder approval, which is expected some time in February.